Aave wstETH on Optimism - Liquid Staking Yield on L2

What is Aave Optimism wstETH?

Aave Optimism wstETH is a lending market for Lido's wrapped staked ETH on Aave V3's Optimism deployment. wstETH already earns ETH staking rewards (~3-4% APY). Supplying to Aave adds a second yield layer from borrowers, though this additional yield is typically minimal as most users hold wstETH as collateral rather than borrowing it.

How This Market Works

The wstETH lending market on Optimism:

Bridge wstETH to Optimism network
Deposit wstETH into Aave V3 lending pool
Receive aOptwstETH tokens representing your deposit
Earn staking yield (always) plus Aave supply yield (when borrowed)
Withdraw wstETH plus any additional yield

Yield Composition: Total return = Lido staking yield + Aave supply yield. The Aave component is typically very low because wstETH is mainly used as collateral, not borrowed.

What Assets Are Involved

Supply Asset: wstETH (Wrapped Staked ETH) on Optimism Receipt Token: aOptwstETH - Aave Optimism deposit token Underlying: ETH staked with Lido validators

Primary wstETH uses on Optimism:

Collateral for borrowing stablecoins or ETH
E-Mode positions for capital-efficient leverage
Recursive borrowing strategies
Cross-chain yield optimization

E-Mode on Optimism

Aave V3's Efficiency Mode enables:

Higher LTV for correlated assets (wstETH/ETH)
Up to 93% LTV in ETH-correlated E-Mode
Capital-efficient leverage strategies
Amplified staking yields through recursion

Optimism L2 Benefits

Optimism offers advantages for DeFi:

Lower Fees: ~90% cheaper than Ethereum mainnet
Ethereum Security: Inherits L1 security through rollup
Growing Liquidity: Major protocols deployed
OP Incentives: Potential governance token rewards

Risk Disclosures

Smart Contract Risk: Exposure to Aave V3, Lido, and Optimism bridge contracts. Liquid Staking Risk: wstETH value depends on Lido validator operations. Slashing could reduce value. Bridge Risk: wstETH on Optimism is bridged from Ethereum. Bridge security is a dependency. L2 Risk: Optimism is a rollup with different security properties than L1. Sequencer behavior matters. Oracle Risk: wstETH/ETH ratio pricing requires accurate oracle data. Utilization Risk: Very low borrowing demand for wstETH means minimal additional yield beyond staking. Withdrawal Delay: Optimism withdrawals to L1 have a 7-day challenge period. Opportunity Cost: Compare yields to mainnet wstETH lending and direct staking.

Aave Optimism wstETH