[BIP-728] Enable tETH-wstETH Gauge [Ethereum]

BAL Gauges
1

PR with Payload

Summary:
tETH is a liquid staking token (LST) that converges the fragmented on-chain ETH interest rates market. Holders of tETH earn real yield in excess of Ethereum’s Proof-of-Stake (PoS) rewards through interest rate arbitrage while still being able to use tETH for DeFi activities.

The Treehouse Protocol team proposes a Balancer Gauge for the tETH-wstETH pool on Ethereum with no emissions cap.

References/Useful links:

Link to:

Protocol Description:

Treehouse is a protocol that is building the decentralized fixed income layer for digital assets. Its main product offerings, tAssets and the Decentralized Offered Rate (DOR), were developed to address a critical gap in the fixed income digital assets market and set a standard for decentralized reference rates.

tETH, the first tAsset deployed on the Ethereum mainnet, is a liquid staking token (LST) that converges the fragmented on-chain ETH interest rates market. Holders of tETH earn real yield exceeding Ethereum’s Proof-of-Stake (PoS) rewards through interest rate arbitrage across various lending and borrowing protocols, all while retaining the ability to use tETH for other DeFi activities.

Since its launch, the tETH vault has accumulated a Total Value Locked (TVL) of $140 million worth of ETH within just a month and a half.

Motivation:

Treehouse Protocol is working to establish the tETH-wstETH Gauge on Balancer to enhance the liquidity of tETH. Increased liquidity facilitates smoother entry and exit for traders and investors, which is essential for the overall usability and appeal of liquid staking tokens (LSTs) within the DeFi ecosystem. This liquidity boost not only supports market efficiency but also attracts more participants to the Balancer ecosystem, where the tETH-wstETH pool will generate yield for both liquidity providers and Balancer.

Specifications:

  1. Governance: All ownable contracts are secured with a 5/7 multi-sig. Only the tETH contract is upgradable for future expansion plans.

  2. Oracles: tETH-wstETH rate provider is based on wstETH as a base asset, it is not compatible with any pools aside from a wstETH pairing for the intended use of a rate provider.

  3. Audits: Treehouse Protocol has been audited by entities such as Fuzzland, Sigma Prime, and Trail of Bits and the reports can be seen in the GitHub repository here

  4. Centralization vectors: The centralization vector primarily involves the execution of actions in the strategy contract which are done by a multi-sig appointed by the contract owner. However, all action contracts are well-defined and the executors can only perform the whitelisted actions included in the strategy contract.

  5. Market History: tETH has accumulated a Total Value Locked (TVL) of $140M worth of ETH since its launch on 10th September 2024. The tETH-wstETH Balancer pool has been in inception since 23 October 2024. More information about tETH and the Treehouse Protocol ecosystem can be found on the Dune Dashboard.
    -tETH-wstETH pool
    -tETH-wstETH pool gauge

  6. Value: The tETH-wstETH pool on Balancer is designed to be a key source of liquidity for the token on the Ethereum network. By pairing tETH with wstETH, the pool aims to provide a seamless trading experience while also offering enhanced rewards for liquidity providers. This structure is intended to optimize both liquidity and profitability within the ecosystem. In addition, users who stake their tETH-wstETH LP tokens will be able to earn points from our current ongoing points program.

Transaction Specification:

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): 0xf697535848B535900c76f70F1e36EC3985D27862
gaugeType(string): Ethereum

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https://snapshot.org/#/balancer.eth/proposal/0xe60685310c8a88dd88ba250deb059c563f533b3cf86d4620280f763b7f2e7d80