[BIP-577] Enable pufETH/wstETH [Ethereum]

BAL Gauges
1

PR with Payload

Summary:

Puffer Finance is a unique solution introduced in the heart of the liquid restaking craze the has been sweeping the Defi ecosystem. The purpose of this gauge is give pufETH holders a place to keep their liquidity and not be susceptible to rate arbitrage over time, while earning yield on wstETH and via Balancer’s core pool infrastructure

This gauge is uncapped, and would enter as a “core pool” under BIP-19.

References/Useful links:

pufETH

Protocol Description:

Puffer is a native liquid restaking protocol (nLRP) designed to optimize the potential of restaking, built on Eigenlayer. It offers a comprehensive framework for stakeholders, including Stakers and Node Operators (NoOps), to engage in decentralized validation while enhancing rewards and safeguarding Ethereum’s ethos.

The protocol’s design encompasses various components:

  1. Protocol Features:
  • Permissionless operation allows anyone to become a validator on Puffer, promoting accessibility.
  • Native Restaking introduces the first liquid restaking protocol on Eigenlayer.
  • Ethos Alignment ensures the protocol’s self-capping mechanism to protect Ethereum’s integrity.
  • Explosive Growth potential for the protocol’s native asset, pufETH, irrespective of validator queue lengths.
  1. NoOps Advantages:
  • Capital Efficiency requires less than 2 ETH to operate a validator, encouraging wider participation.
  • Slash Protection through anti-slashing hardware support mitigates risks.
  • MEV Autonomy empowers NoOps to tailor their MEV strategy, enhancing Ethereum’s resilience.
  1. Rewards Mechanism:
  • Liquid Staking allows stakeholders to stake any amount of ETH, promoting flexibility.
  • Restaking Rewards integration with Eigenlayer amplifies rewards for participants.
  • Validator Tickets incentivize participation and create new markets within the ecosystem.
  • Liquid Rewards ensure immediate liquidity for NoOps’ execution rewards.

The Puffer Flywheel relies on collaborative efforts between Stakers and NoOps to drive growth while maintaining Ethereum’s credibility. Governance oversees the creation and management of restaking modules, ensuring alignment with protocol objectives.

The process involves:

  • Staking ETH to mint pufETH tokens, providing a redeemable receipt for restaked ETH.
  • Registering a NoOp Validator by depositing validator tickets and collateral.
  • Provisioning ETH to NoOps’ pending validators, ensuring fair servicing of protocol modules.
  • Earning PoS and Restaking Rewards based on validator performance and AVS execution.
  • Exiting Validators involves validating proof of exit and compensation for potential penalties.

Overall, Puffer offers a robust ecosystem for stakeholders to participate in decentralized validation, optimize rewards, and contribute to Ethereum’s decentralization and security.

Motivation:

As pufETH grows in popularity and is able to generate yield for the holders, Balancer’s tech utilizing rate provider oracles remains the optimal solution for liquidity providers retaining their yield. This will prove competitive over the long haul giving independent holders the option to choose between various Dexes for where to support their yield bearing assets. Balancer will also be providing incentives via their core pool mechanics.

Specifications:

  1. Governance:
    Puffer is decentralized in nature but is under construction in governance terms. See this portion of their documentation.

  2. Oracles:

  1. Audits:
  • pufETH has undergone several audits which are all outlined in their github repo.

  1. Centralization vectors:
    Centralization vectors currently are around upgradeability via proxy multi-sig and front-end hosting. Even those are only possible through multiple signers, no singularity.

  2. Market History:

  • pufETH holds more than 1 billion USD worth of ETH and its trading history can be found here.
  1. Value:
  • pufETH holders are able to provide liquidity, leverage long term yield flywheels and a pairing with wstETH for higher capital efficiency, without increased underlying values suffering arbitrage. Balancer is able to solidify itself further with every partner in the LRT/LST market. This pool is a Core Pool and therefore will generate revenue for the DAO.

Pool Details

Link to Pool: 0x63E0d47A6964aD1565345Da9bfA66659F4983F02
Link to Gauges: 0x0B9Ea598757c7D03FB1937cc16bdD2C9D416ff80

Specification

Transaction: The Balancer Maxi LM Multisig eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments:

gauge(address): 0x0B9Ea598757c7D03FB1937cc16bdD2C9D416ff80

gaugeType(string): Ethereum

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https://snapshot.org/#/balancer.eth/proposal/0xa1f76b92cd658aafbaa6a7ca4218bca564df75a6ff200536b376ffc3e83c3d0c

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