The discussion revolved around a proposal by Llamaxyz for the creation of an ETH nominated E-Mode on Aave Optimism v3¹. The proposal aims to increase borrowing demand for wETH and enhance revenue generation, motivated by the observed demand for yield generation by borrowing wETH and acquiring more wstETH to loop¹. The proposal also suggests the use of several Chainlink oracles for exchange rates and price information, with the wstETH oracle on Optimism expected to de-risk the Optimism E-Mode¹.

The proposed risk parameters include a Loan to Value of 90.00%, a Liquidation Threshold of 93.00%, and a Liquidation Bonus of 1.00%¹. However, Saludiego201 expressed skepticism about the idea, suggesting it would be better to wait for more history with the existing withdrawals or for them to be enabled in L2². On the other hand, ChaosLabs supported the proposal, referencing a previous discussion and their own methodology update³. A Snapshot proposal was created to progress this proposal through the Aave Governance process⁴.

Gauntlet also expressed support for the proposal, stating that they would provide risk parameter recommendations for the ETH-correlated E-Mode once certain conditions were met⁵. Michigan_Blockchain pointed out a potential error in the loan-to-value (LTV) and liquidation threshold (LT) figures, suggesting that the LT is usually higher than the LTV⁶. Llamaxyz confirmed this error and amended the post to reflect the correct figures⁷. The discussion concluded with the proposal being progressed through the Aave Governance process, with the community awaiting further updates.