However if (and only if) redemptions in the LRT/LST are open, then it is preferred to utilise the onchain redemption price rather than depend on a chainlink/redstone oracle aggregator. This is because any temporary liquidity issues or quick large sells into low liquidity AMMs can cause a move in the off-chain oracle, which introduces an unnecessary risk of liquidations.
This was seen recently within ezETH, where a large amount of positions were liquidated. Redemptions are NOT open there (but will be shortly).
Both weETH and ezETH are upgradeable contracts, and so to add security against manipulation of this share price, a cap is added to the maximum expected growth rate. If the share price is larger than this cap then the capped amount is returned.
This follows a similar Oracle structure to the existing (and very popular) Aave v3 weETH market. The Aave oracle for this market is here
Because of the reduction in liquidation risk, the LLTV of these pools could also be increased.
This also follows suit with the existing Morpho wstETH markets, where two exist for the same LLTV:
The latter market is far preferred from a borrower's perspective. Ideally the metamorpho vaults direct most of the liquidity to that latter pool, sooner rather than later.
Further reading on Spark's forum's pegging stETH/ETH to 1:1 is a worthwhile read, which also applies to the other LRTs
The existing ether.fi and Renzo markets rely on Redstone oracles to price in terms of ETH:
However if (and only if) redemptions in the LRT/LST are open, then it is preferred to utilise the onchain redemption price rather than depend on a chainlink/redstone oracle aggregator. This is because any temporary liquidity issues or quick large sells into low liquidity AMMs can cause a move in the off-chain oracle, which introduces an unnecessary risk of liquidations.
This was seen recently within ezETH, where a large amount of positions were liquidated. Redemptions are NOT open there (but will be shortly).
Both weETH and ezETH are upgradeable contracts, and so to add security against manipulation of this share price, a cap is added to the maximum expected growth rate. If the share price is larger than this cap then the capped amount is returned.
This follows a similar Oracle structure to the existing (and very popular) Aave v3 weETH market. The Aave oracle for this market is here
Because of the reduction in liquidation risk, the LLTV of these pools could also be increased.
This also follows suit with the existing Morpho wstETH markets, where two exist for the same LLTV:
The latter market is far preferred from a borrower's perspective. Ideally the metamorpho vaults direct most of the liquidity to that latter pool, sooner rather than later.
Further reading on Spark's forum's pegging stETH/ETH to 1:1 is a worthwhile read, which also applies to the other LRTs