I’m excited to propose adding support for LsETH (Liquid Staked Ethereum), Liquid Collective’s Ethereum liquid staking token, to Moonwell’s core lending markets on Base. Adding LsETH would increase utility for LsETH and allow Moonwell users to earn Ethereum network rewards while maintaining liquidity on their staked positions, improving capital efficiency.
Token Asset Name: LsETH
Key highlights:
- Liquidity on staked Ether: LsETH is a receipt token programmatically generated when users stake ETH through the Liquid Collective protocol.
- Integrated and Compliant: Liquid Collective is integrated into leading digital asset exchanges and custodians, offering native slashing coverage, auto-staking of rewards, diversified node operators, and mandatory KYC/AML when minting or redeeming to support compliance.
- Interoperable cToken Model: LsETH follows the cToken model, making it more interoperable and widely compatible than other receipt tokens, such as the aToken model. This enhances composability and provides unique benefits over other liquid staking solutions.LsETH is a fungible ERC-20 token representing ownership of the underlying staked ETH and accrued staking rewards, minus any fees or penalties.
Benefits to the Moonwell Community:
- Attract New Users: As one of the only liquid staking tokens supported on Coinbase, Anchorage, Kraken, and more, Moonwell’s support for LsETH will draw in users from the centralized exchange and leading Qualified Custodian ecosystem.
- Diversified Collateral Options: Adding LsETH will diversify the types of collateral available on Moonwell, offering users an opportunity to access the upside of staked ETH while maintaining liquidity.
- Enhanced Capital Efficiency: LsETH allows users to earn staking rewards while simultaneously using their assets as collateral in Moonwell, improving overall capital efficiency.
Liquid Collective is seeking to enhance liquidity and utility for LsETH on Base.
Resources (Website, Social Media Links, and docs):
- Website: https://liquidcollective.io/
- Documentation: What is Liquid Collective? | Liquid Collective
- Github: GitHub - liquid-collective/liquid-collective-protocol: Liquid Collective protocol smart contracts
- Twitter: https://x.com/liquid_col
- LinkedIn: https://www.linkedin.com/company/liquidcollective
Market Risk Assessment:
- Market Cap: $210M
- Token Supply: Unlimited
- Vol/Mkt Cap (24h): 0.66%
- 24 Hour Trading Volume: $1.4 million (March 25, 2025)
- Liquidity on DEX:
- Aerodrome: $2M
- Liquidity on CEX:
- Coinbase, Kraken, BIT, LBank: $1.5M
Decentralization:
Token Holders: All LsETH balances can be found by navigating to the Etherscan and Basescan links below:
- Ethereum: $1,938.70 | Liquid Staked ETH (LsETH) Token Tracker | Ethersca
- Base: $1,934.60 | Liquid Staked ETH (LsETH) Token Tracker | BaseScan
Token Contract:
- Base: 0xB29749498954A3A821ec37BdE86e386dF3cE30B6
- Ethereum Mainnet: 0x8c1BEd5b9a0928467c9B1341Da1D7BD5e10b6549
- Blacklist Functionality: Yes
- Is the token pausable? Yes
- Token Standard: ERC-20
- Minter on Base: Chainlink CCIP
- Liquid Collective utilises a gnosis safe multisig to administer the protocol, which has full functional administration permission such as managing validators, configuring Oracles and configuring the Allowlister. All multisig keys are cold wallets. We require 4/7 or more confirmations before transactions are approved.
Smart Contract Risks
Codebase and Onchain Activity:
- Total Transactions: 5,937 on Base
- Age of Token in Days: 56 Days on Base
- Security Posture: Audits
- Basecan: $1,934.60 | Liquid Staked ETH (LsETH) Token Tracker | BaseScan
- Etherscan: $1,938.70 | Liquid Staked ETH (LsETH) Token Tracker | Ethersca
- Test Suite: The repository is public, therefore all test suites can be checked there. The coverage reports are also public and can be found on Codecov.
Note that in addition to the usual tests, we are also running formal verification with Certora’s Prover. - Emergency Contact Information: operations@liquidcollective.io, info@liquidcollective.io
- Expected Response Time: <24hrs
- Security Monitoring Tools: We are using a combination of Tenderly and Hypernative to monitor our protocol.
- Upgradability: Yes
- One of our multisigs - the ProxyAdmin (4-of-7 Safe Wallet on Ethereum mainnet, 2-of-3 Safe Wallet on Base) - can make upgrades.
- An upgrade happens through a multisig proposal. There is no timelock once the proposal has been approved and executed.
- All the Liquid Collective smart contracts on Ethereum mainnet are upgradable, and the token contract on Base is upgradable.
- Liquid Collective uses a custom proxy contract based on the OpenZeppelin TransparentUpgradeableProxy. It introduces functions that allow Liquid Collective to pause and unpause the contract. Upgrades are executed only when necessary, such as for introducing new protocol features.
- Yes, an event “Upgraded” is emitted.
- Github: Liquid Collective · GitHub
- Does the project have an active bug bounty program? No.
Summary of the Liquid Collective Protocol Documentation
The Liquid Collective protocol is a liquid staking solution designed to cater to institutional needs. It allows users to stake Ethereum and mint LsETH, a liquid staking token that represents ownership of the staked ETH and any accrued rewards, minus fees and penalties. Below is a summary of key components and features of the protocol:
Key Features:
- Liquid Staking: Stake ETH, receive LsETH, and access staking rewards while maintaining liquidity.
- Decentralized Validator Set: Distributes staked ETH across multiple node operators to minimize risk.
- Enterprise-Grade Security: Multi-region infrastructure, slashing coverage program, and KYC/AML features.
Benefits:
Liquid Collective Protocol offers several benefits for institutional and enterprise participants in the liquid staking ecosystem:
- Enterprise-grade security: The protocol employs security-focused Node Operators that follow best practices, including multi-region and multi-client infrastructure, technical support teams, and robust security measures.
- Regulatory compliance: Built-in KYC/AML features upon minting and redemption to facilitate compliance, making it suitable for institutions that must meet counterparty risk and compliance mandates.
- Increased liquidity: Users receive LsETH tokens representing their staked ETH and accrued rewards, allowing them to maintain liquidity while staking.
- Decentralization: The protocol delegates tokens to multiple independent validator Node Operators, distributing risk and enhancing decentralization.
- Slashing coverage: Node Operators support a Slashing Coverage Program, providing protection against slashing incidents and missed rewards due to infrastructure faults.
- Collaborative approach: Liquid Collective unites industry leaders, fostering innovation and interoperability across different platforms.
Risks:
While Liquid Collective aims to provide a secure liquid staking solution, there are several risks associated with utilizing the protocol:
- Smart Contract Risk: As with any protocol, there’s a potential for code vulnerabilities that might be missed by third-party auditors.
- Slashing Risk: Validators may be penalized for failing to perform their job efficiently, resulting from validator downtime or double signing events.
- Liquidity Risks: While LsETH tokens are designed to be liquid, market conditions could affect their liquidity.
Oracle Assessment:
Oracle Price Feed Addresses:
Base Market Price Feed: 0xeDC243c7E3c1A9dAf067C90641D2346d2694d2e5
Base Exchange Rate Feed: 0x2621897C993fdE08873Ef58dA1453aEE49a70144
Price Assessment: LsETH follows a cToken model, where staking rewards are reflected as an increasing conversion rate between LsETH and ETH. Below is the historical deviation in price between LsETH and ETH over the last 180 Days (Source)
Proof of Reserve Mechanism: To report the protocol conversion rate, there is a group of oracles which report on the protocol’s underlying ETH supply roughly every ~24hrs.
Proposal Author Information
Name: Lukas Philipp
Relationship with Token: Professional working relationship with LsETH via The Liquid Foundation.
Conclusion:
Adding LsETH as a core lending market will provide Moonwell users with access to liquid staking benefits, enhance capital efficiency, and attract new participants from the Liquid Collective ecosystem. This proposal aims to foster further innovation and growth on the Moonwell platform.
I’m opening this proposal to the community for review, discussion, and feedback to ensure its success and alignment with our vision for a secure and decentralized onchain financial future.
Invitation to Gauntlet
We invite @Gauntlet to review LsETH as collateral and provide a risk recommendation to support a thorough assessment and alignment with Moonwell’s risk management framework.
