Add Wrapped Super OETH market to Moonwell on Base

Proposals
1

General Information

  • Asset Name : Wrapped Super OETH (wsuperOETHb)

  • Address: 0x7FcD174E80f264448ebeE8c88a7C4476AAF58Ea6

  • Project & Token Description:

    • Super OETH (superOETHb) is the next iteration of OETH, a superior LST with an extremely tight 1:1 peg and high yields thanks to a combination of the OETH AMO and DVT direct staking through SSV/P2p. superOETHb yields are able to reach double digit levels, making it an exceptionally perfect token for lending and borrowing against ETH. superOETHb was built reusing 90% of the code from OETH, for which the codebase has already been audited 12+ times.
    • Super OETH is the first token in a new category of liquid staking: Supercharged LSTs. Supercharged LSTs will have materially higher yield while being designed for L2s, with a similar risk profile to mainnet LSTs. Ethereum liquid staking is amplified with chain-specific, auto-compounded incentives. Deep concentrated liquidity pools guarantee exits with minimal costs - users will never lose ability to convert back to ETH.
    • wsuperOETHb is a ERC-4626 tokenized vault designed to accrue yield in price rather than in quantity. When you wrap superOETHb, you get back a fixed number of wsuperOETHb tokens. This number will not go up - you will have the same number of wsuperOETHb tokens tomorrow as you have today. However, the number of superOETHb tokens that you can unwrap to will go up over time, as wsuperOETHb earns yield at the same rate as standard superOETHb. The wsuperOETHb to superOETHb exchange rate can be read from the contract (function number 16), or via the superOETHb dapp.
    • Current exchange rate as of 10/3/24: 1 wsuperOETHb = 1.01410462 superOETHb

  • Benefits to Moonwell Community:

    • This new Super OETH market would lead to additional increased TVL for Moonwell, additional revenue to the Moonwell Protocol and DAO from active loans and liquidations, and will attract a wider user base.
    • We’ve noticed many LSTs trade below their peg due to DEX fees and slippage, and to reflect the time value of money. LSTs that consistently trade below peg effectively impose a hidden exit fee - certain LSTs often trade ~0.25% below peg, meaning it takes three weeks of staking to break even. This may be ok for long-term holders, but is terrible for projects who plan to integrate the LSTs, or for users who plan to loop LTSs for additional yield. This is not the case with OETH, and it will not be the case with Super OETH.
    • Using Super OETH on Moonwell will produce significantly higher yield than the other supported LSTs and will have a near perfect ETH peg. Utilizing a concentrated Aerodrome liquidity pool with the tightest tick possible helps make Super OETH the most pegged L2 LST currently available, while being able to reach double digit yields.
    • Super OETH has a native yield of 15.10% APY - at the current ETH borrow rate on Moonwell Base of 0.7%, one loop at 75% LTV would now yield you 25.90% APY. After 5 loops that number jumps to 48.05%, or 50.79% when including the WELL emissions. These figures are not possible with the LSTs and LRTs currently supported on Moonwell. Our vision for Super OETH is for it to become both the most trusted LST, and also the most lucrative for those seeking to use an LST for leveraged staking.

Resources & Social channels

Performance

  • Super OETH has seen incredible growth since launch, growing from $7m to over $300m over the last 3 weeks. Proof of Yield tracks the distribution of each Super OETH rebase event and displays the compounded yield on an annualized basis each day. Super OETH has reached the number one spot by TVL on Defillama for yield projects on Base and accounts for a large amount of the Aerodrome Slipstream TVL .

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Market Risk Assessment

  • Market cap of the token: $322m (138k ETH)
  • Total supply: 138k superOETHb
  • The largest central and decentralized exchanges where the token is listed and its respective liquidity:
    • Super OETH is listed on the following DEXs:
    • Swapping on WETH/superOETHb - $318.21mm TVL
    • Swapping on OGN/superOETHb - $11.93m TVL
    • Swapping on USDC/superOETHb - $18.68k TVL
    • 1inch is enabling routes for wsuperOETHb > ETH and ETH > wsuperOETHb using these DEXs, as well as using the 4626 contract when applicable.
  • Volatility: Since superOETHb is pegged 1:1 to ETH, superOETHb volatility is directly related to ETH’s volatility.
  • Average daily trading volume on CEX and DEX: Daily Volume: $1-4m
  • Gini coefficient and Herfindahl index of token balances
    • Glassnode Studio unfortunately does not support these metrics for Super OETH. However, the largest holders and their percentage of the token supply can be found here, and this Dune dashboard aggregates the activity of wsuperOETHb and superOETHb token holders
  • Emission schedule: There is no set emission schedule for Super OETH. Similar to stETH and OETH, Super OETH is minted on demand when users deposit ETH into the protocol. Exits to ETH are always available via the Aerodrome pool. Permisionless async redemptions are on the roadmap and are currently pending audit.

Decentralization

  • List the top token holders: The largest superOETHb holders can be found here: holders
  • Largest contracts:
  • List all of the privileged roles in the token contract: Certain functions can be called by Origin Guardians - Guardians use a 2 of 8 multisig with limited powers that can be found in the governance section of the superOETHb docs. All other necessary protocol powers require 5 of 8 signatures.
  • Is the token pausable?: The superOETHb contract can be paused by Guardians to handle security threats and crisis management.
  • Does the token have a blacklist?: There is no blacklist or whitelist, however the superOETHb dapp is unavailable to people in the USA, and certain sanctioned countries.

Smart Contract Risks

Codebase & On-chain Activity

Security Posture

  • What audits, if any, were performed?
    • superOETHb and wsuperOETHb were built reusing 90% of the OETH code, which was built reusing 95% of the OUSD code, of which many audits have been done since 2020. Not that long ago, OUSD reached a market cap of $300m without breaking, and without diminishing the APY it was capable of generating. The new Super OETH code that was not reused from OETH was audited in September of this year. All OETH audits can be found in the audits section of the OETH docs. We have recently retained yAudit to look at our PRs as we code, and OpenZeppelin is also held on retainer to review 100% of the OETH and OUSD smart contract changes.
  • Does the project have an active bug bounty program?
    • Origin maintains an active bug bounty with rewards ranging in size from $100 OUSD for minor issues to $1,000,000 OUSD for major critical vulnerabilities. The bug bounty program is currently administered by Immunefi, where Origin maintains a median resolution time of 6 hours.
  • Provide emergency contacts with their estimated response time/availability
    • The Origin team is available 24 hours a day via Discord. On March 10 2023 when USDC depegged from the dollar (and therefore from OUSD), it took the Guardians/Origin engineers about 4 minutes to notice, and 16 minutes to start the process of moving the funds to a safer strategy. superOETHb and wsuperOETHb will have no exposure to stablecoins nor any other pegged asset aside from WETH.
    • Please also contact the Origin support team directly if there are any issues and someone from the Origin team will respond promptly: support@originprotocol.com
  • List additional security and formal verification tools used in the development
    • We mostly manually verify deployments before the multisig tx is created. We use Sol2uml to verify deployed contracts. We also have Slither as part of our CI. We also have some scripts in our repo that we use as needed.
  • List all monitoring services used by the token, if any.
    • We use an in-house solution based on Subsquid as our indexer and Grafana. We also add custom alerts on Tenderly for critical events.

Upgradability

  • Is it upgradeable?: Yes, superOETHb is upgradable.
  • Who is authorized to make an upgrade? Can an upgrade happen instantaneously or is there a time-lock delay?
    • All Super OETH contracts are owned by the Timelock contract. All upgrades will have to go through Timelock. The Timelock is controlled by the 5 of 8 multisig mentioned above. Signers are trusted contributors who are actively involved in the day-to-day management of the protocol and all have a vested interest in helping the protocol succeed. The initial timelock was set to 60 seconds to allow the protocol to ramp up quickly, but it has been increased to 48 hours.
  • Which components are upgradeable?: The whole token contract can be upgraded.
  • How does the upgradeability design work? Who manages it and how are upgrades performed?: All Super OETH contracts are owned by the Timelock contract. All upgrades will have to go through Timelock. The timelock is controlled by the 5 of 8 multisig mentioned above.
  • Does it emit an event when the implementation is updated?
    • Yes, it emits event Upgraded(address indexed implementation);

Oracle Assessment

  • Chainlink oracle price feed address
    • superOETHb is derived from OETH, which has mainnet oracles from Chainlink, Tellor, and Dia. Through its integration with Aerodrome, Super OETH is able to ensure a 1:1 peg with ETH at any scale. The Super OETH AMO holds a portion of the protocol’s underlying collateral in a concentrated liquidity pool with an extremely tight price range within a single tick above 1.0000 WETH. This allows anyone to sell superOETHb into the pool for at least 1 WETH (minus swap fees). The Aerodrome TWAP quoter, which works the same as the Uniswap TWAP oracle, can be used to derive the price of superOETHb on chain, and a superOETHb Tellor oracle is also available. A new oracle through Dia is currently in the works.
      • If used, the Tellor superOETH/ETH feed has a 4 hour heartbeat, and a 2% deviation threshold.
    • Chainlink has actually recommended protocols treat superOETHb to be 1:1 with ETH rather than use an oracle, as Aave has done with stETH. Both Morpho and Silo have done this with their wOETH markets, and Morpho and Ionic are currently doing this with their superOETHb markets.
  • How is the asset wrapped, staked, or otherwise created?
    • superOETHb can be minted from the contract, dapp, or swapped into from one of the above Aerodrome pools. Wrapped superOETHb can be created at any time using the 4626 contract, or the superOETHb dapp.
  • On what network does the underlying asset exist?: The underlying asset exists on Base, with a portion of the yield coming from mainnet beacon chain staking.
  • How can you verify that the amount of the asset that is minted is never more than the amount of the underlying asset that is locked, staked, or used as collateral?
    • The only way that users can obtain superOETHb is by first providing the protocol ETH or WETH. Additional superOETHb may be minted by the protocol AMO, but these tokens are owned by Origin Protocol and only ever enter circulation when someone provides ETH to the Aerodrome pool.
  • Is there a way to verify proof of reserves (PoR) on the same network as the market?
    • The protocol mainly holds WETH in the Vault, Aerodrome pool and Bridged wOETH.
      • Relevant addresses:
        0x98a0cbef61bd2d21435f433be4cd42b56b38cc93 - Vault 0xF611cC500eEE7E4e4763A05FE623E2363c86d2Af - Areo pool strategy 0x80c864704DD06C3693ed5179190786EE38ACf835 - Bridged wOETH strategy
    • The bridged wOETH holds ETH on the mainent in the validators. The Vault holds WETH until it deposits it somewhere. The Aerodrome pool has WETH as part of its liquidity.
  • Please provide an analysis of the price deviation from the underlying asset:
    • Over the life of Super OETH, superOETHb has remained incredibly pegged to ETH, with very little deviation, especially when compared to the LSTs currently supported on Moonwell:

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  • What specific events might cause the price to “depeg” or no longer be the same as the price of the underlying asset?
    • If more circulating superOETHb was supplied to the Aerodrome pool than the amount of ETH in the pool, a depeg could theoretically occur. This is mitigated by the question above.
    • OETH validator slashing may cause a depeg. However, the size of the slash will likely be smaller than the underlying superOETHb yield, so in this case the yield for superOETHb will temporarily be smaller.

Next Steps

Origin invites the community to consider this application for listing a wsuperOETHb market on Moonwell and welcomes any suggestions in this direction. Origin also looks forward to the community and Gauntlet to suggest:

  • Collateral/Reserve Factor
  • Supply Cap
  • Borrow Cap
  • Protocol Seize Share
4 Likes
2

This proposal has been escalated to Snapshot: Snapshot

2 Likes
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Based on the recent Snapshot, Origin Protocol’s Super OETH saw immense support from the Moonwell community; with community members and delegates also voting for the proposal. The snapshot saw overwhelming support from 95 community members with a total of ~8.7m WELL voting for the snapshot. The snapshot saw just 3 voters against the proposal.

Unfortunately, the vote was unsuccessful due to a large vote by the user holding wallet address 0xb6cb536C6695fb75d504593Fe6C04bCb7582E698. This user holds 37M WELL alone and added a vote with reason: “No chainlink feed, too risky.”

To address this user’s concerns:

On Chainlink feed:

  • The Chainlink team has actually recommended protocols treat superOETHb to be 1:1 with ETH instead of using an oracle, as Aave has done with stETH. Both Morpho and Silo have done this with their wOETH markets, and Morpho and Ionic and now Silo are currently doing this with their superOETHb markets. Supply and borrow caps can be initially implemented to help the community become comforable with this setup.

On being too risky:

  • superOETHb and wsuperOETHb were built reusing 90% of the OETH code, which was built reusing 95% of the OUSD code, of which many audits have been done since 2020. The new Super OETH code that was not reused from OETH was audited in September of this year. All OETH audits can be found in the audits section of the OETH docs. We have recently retained yAudit to look at our PRs as we code, and OpenZeppelin is also held on retainer to review 100% of the OETH and OUSD smart contract changes.
  • Origin maintains a $1,000,000 bug bounty at all times. with a median resolution time of 6 hours.
  • Compared to the LSTs and LRTs currently supported on Moonwell, Super OETH is incredibly well pegged:

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We invite constructive dialog from the Moonwell community and voters that can help both protocols grow, and would also like to invite the 37m $WELL voter to share his thought process for voting No with the community. Origin actively participated during the recent Moonwell Governance Calls in September and October to provide the community further insights into the utility and rewards that the addition of Super OETH brings to the Moonwell markets.

For next steps we’ll be posting another snapshot proposal later this month after garnering more community support and feedback over the next few weeks.

1 Like
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Not sure who the 30m+ votes are but we are in full favor of this being added. The liquidity is there, and there is certainly interest in our opinion to be able to loop.

We’d be in favor of implementing superOETH with minimal caps to start and slowly increasing over time if needed. Maybe having isolated market down the line? Would also be nice to maybe have the chainlink team comment on this as you mentioned they had prior reviewed this.

1 Like
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As someone actively involved in DeFi governance, I feel the need to respectfully correct a point regarding Chainlink’s role here. Chainlink does not make recommendations that any project, such as Aave or Moonwell use a specific price feed for a specific purpose. Rather, they recommend to LST asset issuers like Origin that they can pursue exchange rate or market rate price feeds through Chainlink in order to enable lending protocols to safely support them.

To confirm the accuracy of this statement, Moonwell Contributors met with Chainlink and their team conveyed that they have met with Origin months ago, and at the time simply recommended they pursue a Chainlink price feed. They did not make the recommendation stated above by the Origin team.

Additionally, I believe that any new market should incorporate a Chainlink price feed to be safely added to Moonwell. These price feeds have been instrumental in keeping Moonwell secure and reducing the risk of bad debt to the protocol. Introducing a new market without such safeguards could pose significant risks, and I would advise against taking that chance.

2 Likes
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Hi @0xMims ,

Thank you for your input, but this is incorrect. Chainlink absolutely makes recommendations to projects/protocols on which oracles are safe to use for different markets, they just do so via direct communication to the project teams instead of via public governance forum. Here is a screenshot of one of the many times this was done (with names redacted to prevent doxxing):
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I am not sure who you spoke with from Chainlink, but we speak with the Chainlink team regularly each week. We can set up detailed correspondence between Origin, Moonwell, and Chainlink to confirm the above recommendations.

There are several ways to safely incorporate new markets to Moonwell without having a Chainlink feed for superOETHb. An easy option would be to incorporate a low supply and borrow cap initially, and ramp up over time and the community and contributors become comfortable with superOETHb. If assuming superOETHb:ETH=1, Moonwell could also easily multiply with Chainlink’s ETH-USD market feed to derive a primary rate of superOETHb-USD.

7

It has come to my attention that a few areas of our proposal are ambiguous and could be improved with some clarifications. We also respect the community’s vote on the temperature check and will not be pursuing a Super OETH market on Moonwell at this time.

The opening paragraph of our token description makes several references to OETH in regard to yield sources and security audits. This is because ~90% of the Super OETH code is inherited from OETH. I can see how a reader might interpret those statements to apply to Super OETH, specifically. Super OETH is a much newer token and it has a novel integration with Aerodrome in addition to accessing Beacon chain yield by holding OETH. That new code has been audited by OpenZeppelin and the proposal links to our docs where the characteristics and yield sources for Super OETH are described in more detail.

Further down the proposal, we share our opinion that Super OETH has a similar risk profile compared to LSTs. We believe that all LSTs are not created equal and that some have unique characteristics that present different risks. With such deep concentrated exit liquidity on Aerodrome, it’s reasonable to conclude that Super OETH is actually safer than some (not all) LSTs on Ethereum. We certainly respect the opinion of anyone who disagrees with this position. We also encourage every user to conduct her own research and not hold Super OETH or lend against it without fully understanding the risks involved.

Finally, Chainlink has made no recommendations specific to Super OETH other than floating the possibility of a market rate feed being created. At the same time, we have had a market rate feed for OETH since March of this year and, to my knowledge, every meaningful money market integration of OETH has elected to treat OETH:ETH as 1:1 and pair this with the exchange rate of OETH:wOETH for the purpose of managing liquidations. We’re under the impression that most, if not all, of the protocols made such a determination after speaking directly to Chainlink. I understand that Super OETH is not simply OETH bridged to Base. I think we’ve made that clear to every integration partner we’ve talked to and it’s self-evident by the fact that they have drastically different APYs. Again, we respect the decision of any protocol to make its own determination about the risks associated with exchange rate feeds and whether Super OETH is similar enough to OETH to warrant the same oracle treatment.

We appreciate the feedback we’ve received from the Moonwell team and want to thank everyone who supported our proposal as well as those who took time to understand the risks and reached a different conclusion. At this time, we will no longer be pursuing a Super OETH market on Moonwell. If circumstances change, we will be happy to work together in the future. The future is bright for the entire Base ecosystem and we’re thankful to be a part of it.