Summary
Objective Labs recommends listing tETH on Euler Arbitrum as a borrowable and collateral asset within the ETH-correlated category. This expands Euler’s LST collateral options on Arbitrum and positions the market as a supply sink for emerging liquid staking ecosystems. Currently, tETH is not listed on any major lending protocol on Arbitrum, offering Euler the opportunity to lead adoption of Treehouse’s LST on the chain.
Fundamentals
tETH is a liquid staking token issued by Treehouse, representing staked ETH with a non-rebasing structure. It accrues yield through a combination of staking rewards, interest rate arbitrage strategies, and protocol incentives. Specifically, tETH sources its base yield from LSTs (e.g. stETH), and enhances it by borrowing ETH against collateralized LSTs to loop yield exposure. Treehouse further supplements returns through points-based reward campaigns.
As of writing, tETH offers a 3.22% APR, based on validator income and optimized onchain strategies.
Liquidity
tETH currently has a Balancer v2 pool on Arbitrum paired with wstETH, holding $1.72M in TVL. Liquidity in this pool is highly concentrated. Slippage simulations show that up to $1M in tETH can be swapped for ETH with <1% slippage.
Caps
| Asset | Supply Cap | Borrow Cap |
|---|---|---|
| tETH | 100 | 50 |
We recommend initial conservative caps of 100 tETH supply and 50 tETH borrow, reflecting current liquidity while allowing sufficient room for adoption and market discovery.
IRMs
| Asset | Base rate | Kink | Rate at kink | Rate at max |
|---|---|---|---|---|
| tETH | 0% | 50% | 1% | 40% |
We recommend the same IRM used for the other LSTs is the market.
LTVs
We apply a small LTV boost when paired with wstETH since wstETH is the underlying.
| Collateral | Debt | LLTV |
|---|---|---|
| tETH | WETH | 93% |
| tETH | wstETH | 92.5% |
| tETH | weETH | 91% |
| tETH | rsETH | 91% |
| WETH | tETH | 93% |
| wstETH | tETH | 92.5% |
| weETH | tETH | 91% |
| rsETH | tETH | 91% |
Note: the LTV matrix assumes rsETH is integrated (see proposal)
We recommend setting borrow LTVs to 2% below LLTVs.
Oracle
We recommend using Chainlink’s tETH/wstETH exchange rate feed, crossed by the same oracle used for wstETH in the market.