Puffer Finance has released an ARFC proposal focused on bringing pufETH into the Aave V3 ecosystem.

The liquid restaking protocol utilizing EigenLayer has submitted an Aave Request for Final Comments (ARFC) with the goal of integrating pufETH as collateral in Aave V3 to enhance the overall ecosystem. Puffer Finance pufETH is recognized as the liquid staking asset for Puffer Finance, uniquely positioned as a permissionless liquid restaking protocol on the Ethereum network. By leveraging EigenLayer’s restaking framework, pufETH allows users to engage with Ethereum's Proof-of-Stake (PoS) process with just 2 ETH, making staking more accessible while delivering enhanced returns and fostering decentralized validator participation. Aave Supported by a grant from the Ethereum Foundation for the Secure-Signer project, Puffer Finance is introducing cutting-edge security features, including a sophisticated anti-slashing mechanism designed specifically for actively validated services (AVSs) and validators. It proudly stands as the first protocol on EigenLayer to offer a preconfirmation AVS with economic security valued at $2.8 billion.

At present, Puffer Finance oversees a total value locked (TVL) exceeding $279 million, with $141 million distributed across various DeFi platforms like Curve, Pendle, and Karak. Moreover, the protocol has secured around $11 million in pufETH liquidity pools on Curve.

To guarantee users' security and dependability, Puffer Finance has gone through audits by 10 top firms and employs Secure-Signer technology along with anti-slashing strategies to safeguard both users and validators. Six specialist security partners continuously examine the codebase to ensure a permissionless and decentralized validator setup, effectively reducing slashing risks.

What advantages does adding pufETH as collateral bring to Aave?

This integration promises numerous perks for Aave, such as better yield opportunities, heightened security and transparency, as well as market diversification and expansion.

With the inclusion of pufETH, Aave users can benefit from rewards derived from both Ethereum staking and restaking, alongside the conventional returns from lending and borrowing. This enhances capital efficiency, thus strengthening Aave's competitive edge in the lending market.

The robust security framework and transparent operations at Aave offer a trustworthy environment for both borrowers and lenders. Additionally, incorporating pufETH—the sole permissionless liquid restaking token—broadens Aave’s collateral offerings, responding to the rising demand for liquid staking assets. This strategic diversification could lead to increased total value locked (TVL) and heightened activity across the protocol. Aave 🐡 The proposal to introduce pufETH as collateral on Aave V3 is moving forward into the next stage. This effort aims to establish secure restaking and improved liquidity within Aave’s ecosystem.

To foster user engagement and facilitate the adoption of pufETH on Aave, the Puffer Finance Foundation has suggested allocating up to 10% of its CARROT token reserves (used for on-chain incentives) to stimulate borrowing and lending activities. These incentives will benefit early adopters and aid in building liquidity for the pufETH market, with a portion of the CARROT distribution aimed at those lending or borrowing against pufETH on Aave, thereby further promoting protocol usage and acceptance. Puffer Finance Following the ARFC phase, where a more thorough examination of the proposal will take place, an ARFC snapshot vote will help determine subsequent actions. Should the vote yield a positive result, the final step will be to submit an Aave Improvement Proposal (AIP) for a governance vote, ensuring official approval and execution of the proposal.

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