AIP-70 Resume stETH strategies
Status: AIP-70 is up for a snapshot vote until November 12, 2022 at 14:37 UTC
In July 2022, AIP-55 proposed to set stETH and rETH deposit caps to zero due to issues surrounding stETH and rETH pegs to ETH. The proposal passed and, subsequently, the deposit caps were reduced to zero, where they remain today. AIP-70 seeks to increase the deposit caps on stETH only, since rETH does not have an oracle in place. There are two options for this vote. Option 1 - execute the prescribed changes to stETH, which include increasing the deposit caps on mainnet, implementing a ChainLink price oracle, updating the maxloss() parameter, and implement an additional cap raise 1 month after the proposal is passed. Option 2 is to simply keep rETH and stETH caps at zero. In short, Option 1 would allow utilization of stETH strategies and provide Alchemix with an increase of TVL and fee revenue. The introduction of an oracle would assist in controlling a potential alETH arbitrage loop, thus reducing the risk of depegging. Option 2 retains the lack of exposure of alETH to stETh and rETH peg risk, as well as eliminating potential rewards for users and the protocol. In other words, no risk, no reward with Option 2. AIP-70 goes into more detail around how this will be implemented and the effects on the community, so be sure to read it in full!
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