The Aave DAO just approved a V3 pool designed specifically for @lidofinance stETH and wstETH.
This new Lido pool is the first custom deployment on Aave V3, showcasing the protocol’s versatility and capability to optimize specific use cases.
Liquid staking tokens currently comprise the largest market share of collateral assets on Aave. stETH is the largest collateral source on Aave, with $4.63B supplied, or ~30% of the total Ethereum V3 market size.
This new market enables the Aave DAO to optimize ETH borrowing dynamics by tuning collateralization and interest rate parameters in an isolated market. It minimizes cross collateral risk from other tokens and creates a venue to introduce new Lido Alliance partner tokens.
Importantly, this deployment paves the way for a new strategy: custom deployments can be done by third parties to optimize parameters for specific use cases such as institutional or isolated collateral markets.
Lido will provide liquidity incentives to users & builders for novel use cases of staked ETH, supporting further growth of the Lido ecosystem and making Aave the preferred venue for users who leverage wstETH.
Read more: <avara.xyz/blog/aave-dao-launches-lido-specific-market>
