stETH on Aave

News Flash: On May 19, 2022, the risk parameter for stETH as collateral on Aave v2 were changed to a maximum LTV of 69% and a Liquidation Threshold of 81%. Details can be found here.
The Aave v2 lending protocol supports Lido stETH as collateral (but you cannot borrow stETH on Aave).
Every token supported by Aave has specific risk parameters / limits when used as collateral:
  • Maximum LTV. The maximum Loan-to-Value (LTV) ratio is the maximum that can borrowed against the collateral. The current max LTV for stETH is 69%. This means that you can borrow up to 69% of the value of your deposited stETH on Aave.
  • Liquidation Threshold. The liquidation threshold is the LTV threshold past which your position can be liquidated. The current liquidation threshold for stETH is 81%. This means that if the value of your stETH was to decline to the point that the value of your debt now comprised 81% or more of the value of your stETH collateral, then some of your stETH could be liquidated and used to pay down your debt. Given that stETH is pegged to the price of ETH, it would have to become significantly de-pegged for this to occur, see the section on Risk for more.
  • Health Factor. The Aave Health Factor is calculated as: TVL / Liquidation Threshold. As such, when it goes below 1.0, you may be subject to liquidation.