Aave v3.2 Liquid eModes: Now On Base & Arbitrum
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Following the strong adoption of the Lido Protocol - Aave isolated market on Ethereum mainnet, 3.2 liquid eModes are expanding to Layer 2 networks, beginning with Base and Arbitrum.
These markets provide users with new use cases to utilize LRTs as collateral for borrowing wstETH and implementing DeFi use cases with third-party rewards, while also taking advantage of reduced gas costs on L2s.
What's New?
Users can now access new DeFi use cases through 3.2 liquid eModes on Base and Arbitrum, each offering unique third-party rewards and strategy possibilities - from staking and restaking auto-compounded rewards, to efficient points farming. By providing LRTs as collateral to borrow wstETH, users can leverage third-party rewards and benefits within each isolated eMode loop.
Expanding DeFi Use Cases
Each pair leverages Aave v3.2's Liquid eModes feature to enable new DeFi use cases. On Base and Arbitrum, these markets create dedicated environments for LRT-wstETH, with parameters optimized for their use cases. Users can access:
- Supply and borrow rewards maximisation specific pairs.
- Third-party rewards unique to each network.
- Recursive use cases through automated management platforms.
Why Aave v3.2 on L2s?
The new pair isolation on L2 networks offer the same unique use cases introduced on mainnet while adding new benefits. Users can access new DeFi use cases and rewards on their favorite L2 while managing positions with reduced gas fees and faster transaction confirmations. These improvements maintain Ethereum's security foundation while enabling cost-effective position management.
Base offers an optimized experience with some of the lowest gas fees in the ecosystem, while Arbitrum provides access to a mature L2 environment with deep liquidity and extensive DeFi integrations.
As on Ethereum mainnet, DeFi automation platforms provide tools to help execute and maintain recursive positions automatically, streamlining the experience for users.
What are Aave Liquid eModes?
Aave v3.2 introduces Liquid eModes, a feature allowing wstETH to be eligible for multiple efficiency modes (eModes) simultaneously. For users, this means wstETH can now be used across different market configurations with optimized parameters for each use case.
For more information on Liquid eModes, check out the article here: ‘Aave v3.2: Liquid Emodes’.
Getting Started
You can utilize these use cases either directly through Aave or through automated platforms:
Through Aave
- Choose Your Network
- Visit app.aave.com or your preferred DeFi management platform
- Select Arbitrum or Base markets
- Connect your wallet and switch network based on market of choice
- Ensure you have LRT tokens ready or bridge
- Transfer Your Collateral
- Transfer your LRT tokens as collateral
- Benefit from third-party incentives
- Borrow wstETH
- Activate Emode. Learn more on ‘Aave v3: Efficiency Mode (Emode)’.
- Borrow wstETH against your LRT collateral
- Benefit from third-party incentives
Automated Platforms
DeFi automation platforms provide streamlined access to:
- Recursive borrowing use cases
- Auto-compounded rewards
- Position health monitoring
These platforms can handle the entire process from initial transfer to execution, often accepting ETH, stETH, or LRTs directly.
Looking Ahead
The expansion of wstETH liquid eModes continues with:
- Additional L2 network markets
- New LRT collateral options
- More third-party incentives
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