rewrite this title Puffer Finance Publishes ARFC Proposal To Integrate pufETH Into Aave V3 Core Instance

by
Alisa Davidson

Published: February 03, 2025 at 6:47 am Updated: February 03, 2025 at 6:47 am

by Ana

Edited and fact-checked:
February 03, 2025 at 6:47 am

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Liquid restaking protocol built on EigenLayer, Puffer Finance has published an Aave Request for Final Comments (ARFC) proposal to integrate pufETH as collateral on Aave V3, aiming to enhance Aave‘s ecosystem by introducing secure restaking and deeper liquidity. The proposal seeks community and service provider feedback before advancing to the ARFC snapshot phase.

pufETH serves as the liquid staking token for Puffer Finance, which is the only permissionless liquid restaking protocol on Ethereum. By utilizing EigenLayer’s restaking infrastructure, pufETH enables users to participate in Ethereum’s Proof-of-Stake (PoS) system with a minimum of 2 ETH, offering increased staking accessibility, enhanced returns, and decentralized validator engagement.

Supported by an Ethereum Foundation grant for the development of Secure-Signer, Puffer Finance introduces innovative security measures, including an advanced anti-slashing design for actively validated services (AVSs) and validators. It is also the first protocol on EigenLayer to offer a preconfirmation AVS backed by $2.8 billion in economic security.

Puffer Finance currently manages over $279 million in total value locked (TVL), with $141 million deployed across DeFi platforms such as Curve, Pendle, and Karak. Additionally, the protocol has established approximately $11 million in pufETH liquidity pools on Curve.

For ensuring security and reliability, Puffer Finance has undergone audits by 10 leading firms and employs Secure-Signer technology alongside anti-slashing mechanisms to protect both users and validators. Six dedicated security partners continuously assess its codebase, reinforcing a permissionless and decentralized validator framework while mitigating slashing risks.

How Will Adding pufETH As Collateral Benefit Aave?

This deployment offers multiple benefits for Aave, including enhanced yield opportunities, improved security and transparency, as well as diversification and market expansion.

By integrating pufETH, Aave users can earn rewards from both Ethereum staking and restaking, in addition to traditional lending and borrowing returns. This increases capital efficiency and strengthens Aave’s competitive positioning among lending protocols. Puffer Finance‘s advanced security framework and fully transparent on-chain operations provide a reliable environment for both borrowers and lenders. Furthermore, listing pufETH—the only permissionless liquid restaking token (LRT)—expands Aave’s collateral options, addressing the growing demand for liquid staking assets. This diversification can contribute to increased total value locked (TVL) and overall protocol activity.

In order to drive user participation and support the adoption of pufETH on Aave, the Puffer Finance Foundation proposes allocating up to 10% of its CARROT token supply (Puffer Finance’s on-chain incentives) to encourage borrowing and lending activity. These incentives will reward early adopters and help establish liquidity in the pufETH market. Additionally, a portion of the CARROT token distribution will be directed toward users supplying or borrowing against pufETH on Aave, further stimulating protocol engagement and adoption.

Following the ARFC stage—where the proposal will undergo more formal review—an ARFC snapshot vote will determine the next steps. If the outcome is favorable, the final stage will involve publishing an Aave Improvement Proposal (AIP) for a governance vote, ensuring the proposal’s official approval and implementation.

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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.

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Alisa Davidson

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