tETH Strategy Expands with Compound V3 Integration After Snapshot Vote

Trihouse's tETH market efficiency yield (MEY) strategy has added Compound V3 following the passage of TIP 14 in a snapshot vote. The proposal expands the range of collateralized lending protocols by allowing wstETH to be used as collateral for borrowing WETH, thereby increasing liquidity options for loans.

Trihouse publicly introduced the 'TIP 14: tETH Strategy Expansion with Compound V3' proposal on August 26 and moved to community consultation. The snapshot vote followed on August 27, passing unanimously on September 1. Details were posted on Trihouse's governance forum.

The MEY strategy combines base staking rewards with interest rate differentials from lending markets. tETH is a liquid staking token (LST) product that earns Ethereum (ETH) proof-of-stake rewards based on underlying wstETH, provided by Lido. Currently, the strategy operates across four lending protocols: Aave Core and Prime, Gearbox, and Spark.

TIP 14 proposes adding Compound V3's WETH market as an additional protocol, where wstETH can be used as collateral to borrow WETH. This aligns with the existing MEY structure of using wstETH as collateral for borrowing WETH. Trihouse noted that as tETH's total value locked (TVL) grows, there is a need to add more protocols offering competitive borrowing rates and sufficient liquidity while reducing reliance on single platforms.

While TIP 14 passed, the core collateral and leverage limits of the tETH strategy remain unchanged. Capital allocation will be distributed between existing protocols and Compound V3 based on market interest rates, utilization rates, liquidity, and risk levels. Trihouse also acknowledged potential additional risks from smart contracts, oracles, variable borrowing rates, and market liquidity fluctuations associated with integrating Compound V3. The protocol plans to apply existing risk management standards and adjust exposure if market conditions deteriorate.

With TIP 14's approval, the Trihouse protocol will determine collateral ratios, leverage limits, and initial capital allocation ranges for the Compound V3 WETH market. Future positions related to Compound V3 will also be reflected in the reserve proof dashboard. The snapshot vote passed on September 1, with specific implementation schedules and operational details to be finalized in subsequent procedures.