stETH Enables New Strategies on Aave v3.2

Lido -

Starting today, deposits and borrows are available on the Lido Aave V3.2 market, allowing for new strategies for DeFi participants. Users can get staking and restaking rewards with stETH on Aave's Liquid eModes by providing LRTs as collateral and borrowing wstETH while getting Aave rewards.

➡️ To get started, visit app.aave.com.

 

What’s New?

Aave, the leading lending protocol, has introduced v3.2 featuring Liquid eModes—a game-changer for users seeking reward strategies. This new feature allows granular isolation of assets which will provide users ability to provide liquid restaking tokens and borrow wstETH on the Lido - Aave market, providing access to new strategies.

 

Key Highlights:

  • Deposit LRT as Collateral to Borrow wstETH: Users can deposit LRTs in the Lido-Aave market and borrow wstETH against their collateral while getting Aave rewards.
  • Recursive Strategies: The Lido - Aave market enables recursive borrowing through automated looping strategies using DeFi management tools. Users can recursively borrow wstETH against LRT collateral, amplifying the positive differential.
  • New Vaults Coming Soon: Future updates will introduce additional vaults and markets, further expanding the current DeFi strategies available.

 

What is Lido’s stETH?

Lido’s stETH is a rebasable utility token representing your share of ETH staked through Lido protocol. Contrary to wstETH, stETH provides holders with the accrued ETH staking rewards reflected through a daily supply rebase, which sees your supply of stETH increase as staking rewards are generated. 

For more information on stETH, check out the article here: 'What is Lido's stETH'

 

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’

 

Why This Matters

By enabling recursive staking and restaking strategies with stETH, this expansion of stETH use-cases by Aave's Liquid eModes opens up different possible strategies for DeFi enthusiasts.

 

Benefits of Using stETH on Aave's 3.2

  • Wide Range of DeFi Strategies: Aave v3.2's Liquid eModes allow the borrowing of wstETH against your LRT collateral to activate strategies that best suit your goals.
  • Liquidity: stETH offers liquidity across multiple DeFi platforms.
  • Multichain: Beyond Ethereum mainnet, you'll soon be able to borrow wstETH against LRTs on several L2s through Aave, benefiting from lower gas fees.

 

How to Get Started

  1. Choose Your Platform
    • Visit app.aave.com or your preferred DeFi management platform.
    • Connect your wallet and ensure you have LRT tokens ready.
  2. Deposit your collateral
    • Deposit your LRT tokens as collateral in the Lido-Aave market.
    • Benefit from Aave incentives on your deposits.
  3. Borrow wstETH
    • Choose your preferred leverage level based on your risk appetite.
    • Borrow wstETH against your LRT collateral.
  4. Amplify rewards
    • Use DeFi automation platforms to:
      • Implement recursive borrowing strategies.
      • Auto-compound your rewards.
      • Maintain optimal health factors.

 

What’s Next?

Here's what's coming:

  • New vaults and markets will be introduced.
  • Expansion to multiple networks, allowing you to access strategies with the additional benefits of L2s.

 

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