Aave Expands v3.2 Liquid eModes Lido To Base And Arbitrum
In Brief
Lido has expanded Aave v3.2 Liquid eModes to Base and Arbitrum, creating new opportunities for users to utilize LRTs as collateral for borrowing wstETH.
Liquid staking protocol on Ethereum, Lido announced the expansion of Aave 3.2 Liquid eModes to Layer 2 networks, starting with Base and Arbitrum. This move follows the successful adoption of the Lido Protocol within Aave’s isolated market on the Ethereum mainnet.
These specialized markets introduce new opportunities for users to leverage Liquid Restaking Tokens (LRTs) as collateral when borrowing wstETH. Additionally, they enable participation in various decentralized finance (DeFi) strategies that incorporate third-party rewards, all while benefiting from lower transaction costs on Layer 2 networks.
With the integration of 3.2 Liquid eModes on Base and Arbitrum, users gain access to an expanded range of DeFi applications. Each network offers distinct third-party rewards and strategic options, including automated staking and restaking for compounded rewards, as well as efficient yield optimization through structured points farming. By using LRTs as collateral to secure wstETH loans, users can maximize incentives available within each isolated eMode loop.
Why Use Aave v3.2 On Layer 2 Networks And What Are Aave Liquid eModes?
The Aave v3.2 Liquid eModes feature is designed to unlock new DeFi opportunities by optimizing parameters for specific LRT-wstETH market pairs. On Base and Arbitrum, these markets create dedicated environments tailored for this collateral type, allowing users to optimize supply and borrowing rewards, access network-specific third-party incentives, and implement recursive strategies through automation tools.
Expanding these isolated market pairs to Layer 2 networks brings additional benefits while maintaining the functionalities first introduced on the Ethereum mainnet. Users can explore new DeFi opportunities and rewards within their preferred Layer 2 ecosystem, taking advantage of lower gas fees and faster transaction processing. These enhancements preserve Ethereum’s security framework while making position management more cost-effective.
Base is designed for efficiency, offering some of the lowest transaction costs in the ecosystem, while Arbitrum provides access to a well-established Layer 2 network with deep liquidity and extensive DeFi integrations. Similar to the Ethereum mainnet, automation platforms continue to support users in executing and managing recursive positions seamlessly, simplifying the overall experience.
With the introduction of Aave v3.2, the protocol enhances efficiency through Liquid eModes. This feature enables wstETH to be used across multiple efficiency modes (eModes) simultaneously, ensuring optimized parameters for different market configurations. As a result, users benefit from improved borrowing efficiency and tailored collateral strategies across various DeFi environments.
In order to start using Aave’s expanded DeFi markets, users should visit app.aave.com or their preferred DeFi management platform. They need to select either the Arbitrum or Base market, connect their wallet, and switch to the corresponding network. Before proceeding, they must ensure they have Liquid Restaking Tokens (LRTs) ready or bridge assets if necessary. Once prepared, users can transfer their LRT tokens as collateral and begin accessing third-party incentives. After that, they are encouraged to activate eMode, borrow wstETH against their LRT collateral, and take advantage of additional rewards offered through third-party integrations.
Disclaimer
In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.
About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
More articles
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
