Hey Origin Team,
I wanted to drop you some details around our hesitation with including OETH into ETH+. These are not exhaustive and we currently do not have the capacity to perform the due diligence necessary here.
- ETH+ is extremely large and we need to take extra care about introducing additional collaterals into the basket. One thing that jumps out is that inclusion of OETH based on the proposal would mean ETH+ would be holding ~30% of entire OETH TVL. That is extremely high risk, not just for liquidity reasons mentioned later but also just for shear size and dependence.
- Given that ETH+ needs to rebalance into OETH (and also need to consider rebalancing out of it in future), the current liquidity levels do not support this size given that we’d have a price impact of ~20% going out of OETH even though going into OETH is zero slippage. This creates another bottleneck for ETH+ and undermines it’s security.
- OETH is a fairly complex system which includes a native LST as well as an AMO, we’re uncertain at the moment if the latter fits into the ETH+ mandate.
- We’re uncertain about the overall governance structure of OETH, especially given that the token is upgradable.
Given all we know right now, we’re comfortable supporting OETH inclusion into dgnETH, however we are currently not able to support OETH’s inclusion into ETH+ due to the reasons mentioned above. I’d also like to emphasize that we currently do not have the capacity to do the necessary due diligence to get to a point where we would be comfortable going forward with this.