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TVL $5.3BAPY 0.01%low riskUpdated Feb 1, 2025

Aave Ethereum wstETH

Supply wstETH to Aave V3 on Ethereum. Borrowers use wstETH as collateral or for recursive staking strategies.

ProtocolAave V3
Networkethereum
SymbolAETHWSTETH
CategoryMoney Markets
Underlying Assets
wstETHstETHETH
Contract Address0x0b925ed163218f6662a35e0f0371ac234f9e9371

What is Aave Ethereum wstETH?

Aave Ethereum wstETH is a lending market for Lido's wrapped staked ETH (wstETH). This market has unique characteristics because wstETH is already a yield-bearing asset - it accrues ETH staking rewards. Supplying wstETH to Aave adds a second yield layer from borrowers.

How This Market Works

The wstETH lending market operates with some distinctions:

  1. Deposit wstETH (which is already earning ~3-4% from ETH staking)
  2. Receive aETHwstETH tokens representing your deposit
  3. Earn additional interest from borrowers (typically lower than raw ETH markets)
  4. Total yield = Lido staking yield + Aave supply yield
Why Low APY?: Supply rates for wstETH appear low because the market already assumes holders earn staking rewards. Borrowers primarily use wstETH as collateral rather than borrowing it directly.

What Assets Are Involved

Supply Asset: wstETH (Wrapped Staked ETH) - Lido's non-rebasing staked ETH wrapper Receipt Token: aETHwstETH - Aave deposit receipt token

Primary uses in Aave:

  • Collateral for borrowing stablecoins or ETH
  • Recursive leverage (borrow ETH, stake for more wstETH, repeat)
  • E-Mode positions for capital-efficient borrowing

E-Mode for Correlated Assets

Aave V3's Efficiency Mode (E-Mode) allows higher loan-to-value ratios when collateral and borrowed assets are correlated. wstETH/ETH pairs qualify for E-Mode with up to 93% LTV, enabling strategies like:

  • Borrow ETH against wstETH at high leverage
  • Amplify staking yields through recursive borrowing

Risk Disclosures

Smart Contract Risk: Exposure to both Aave and Lido contracts. Vulnerabilities in either protocol could affect your position. Liquid Staking Risk: wstETH value depends on Lido's validator operations. Slashing events could reduce the wstETH/ETH ratio. Oracle Risk: wstETH pricing requires accurate stETH/ETH exchange rate data from oracles. Utilization Risk: While typically lower for wstETH, high utilization could delay withdrawals. Staking Withdrawal Risk: During Ethereum network congestion, converting wstETH back to ETH may have delays through Lido's withdrawal queue. Interest Rate Risk: The additional yield from Aave is variable and may not significantly exceed underlying staking yield during low-demand periods.

Related Money Markets

Aave Ethereum WETH1.25% APYAave Ethereum USDT2.45% APYAave Ethereum USDC3.47% APYAave Ethereum WBTC0.01% APYAave Ethereum cbBTC0.00% APY
Disclaimer: APY and TVL figures are based on on-chain data and may fluctuate. Past performance does not guarantee future results. DeFi investments carry smart contract, market, and liquidity risks. This content is for informational purposes only and does not constitute financial advice. Always conduct your own research before investing.

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