StakeWise founder Dmitri asked Aave governance on Nov. 11 to hold a separate vote on freezing osETH, according to CryptoSlate, which cited his forum response. He is challenging the token’s inclusion in a broader collateral proposal put forward a day earlier by risk adviser LlamaRisk.
As described by CryptoSlate, the LlamaRisk plan would stop new osETH supply and borrowing against it on Aave V3 Core while leaving existing positions open. Under the initial freeze, osETH’s E-Mode borrowing limit would be set to zero, and existing borrowers could repay or migrate.
LlamaRisk’s figures and argument
LlamaRisk’s Nov. 9 analysis estimated osETH collateral at $279.4 million, backing about $256.6 million of WETH debt. The adviser attributed debt proportionally across each borrower’s collateral mix, so the debt figure is an estimate rather than a direct on-chain tally.
LlamaRisk also estimated leverage at around 14 times in the ETH-correlated E-Mode, where osETH had a 93% loan-to-value limit. According to the analysis, the 10 largest positions accounted for 66% of attributed debt.
The adviser argues that V3’s shared lending pool exposes WETH and stablecoin suppliers to collateral risk at a pooled borrowing rate, while borrowers capture the extra spread from looping strategies.
In a static analysis, LlamaRisk found that cutting liquidation thresholds by 2% to 5% would make most collateral in the highly leveraged rsETH and osETH loops eligible for liquidation.
StakeWise’s response
Dmitri said StakeWise has had no hacks or validator slashings since January 2021. He also described immutable native leverage contracts that return borrowed ETH directly from validators. These statements are his own and could not be independently verified.
Transition terms
CryptoSlate reports that the proposal names wstETH, weETH, cbETH and WETH as replacement collateral already available in the same E-Mode, allowing collateral swaps without first repaying all WETH debt.
LlamaRisk also proposes issuer engagement and natural unwinding, with monthly progress reports. If exposure does not fall, a last-resort increase of up to 1% in the WETH base borrow rate would apply, in 0.5% steps no more than monthly. WETH borrowers holding neither rsETH nor osETH would receive rebates.
Aavescan daily snapshots, cited by CryptoSlate, show 122,900 osETH deposited on Nov. 9 and 122,400 on Nov. 11.
On Aave V4, a User Risk Premium charges borrowers according to their collateral, CryptoSlate reported, citing Aave documentation. Neither the proposal nor the V4 overview identifies a specific osETH spoke or premium.
What remains unknown
It is not yet clear whether governance will grant the separate vote, or when any vote would take place. Final migration terms are also open, as is where osETH would sit in Aave V4 and what its numeric premium would be. Nor is it known whether StakeWise has responded formally beyond the forum post.
Sources
- cryptoslate.com CryptoSlate — Aave will freeze $279M in osETH, unless StakeWise wins this vote Accessed
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