LIP-22: stETH on L2 — wstETH on Optimism bridge endpoints upgrade

Description

Tl;dr

The proposal seeks the Lido DAO support on the wstETH on Optimism bridge endpoints upgrade, implementing the architecture approach presented in LIP-22: stETH on L2. If the DAO supports this snapshot vote, an upgrade for the previously deployed wstETH on the Optimism bridging endpoints will be included in the further on-chain vote for both wstETH (non-rebaseable) and stETH (rebaseable) tokens to be supported by the upgraded bridge endpoints version together with the necessary rebase delivery contracts.

The main idea is to achieve a token parity in the future (having both stETH and wstETH) on the top-tier L2s with Ethereum Mainnet, allowing the Optimism network to be a pilot carriage for this change.

Specification

It is proposed to update the following contracts deployed on Ethereum Mainnet and Optimism Mainnet:

• L1ERC20TokenBridge: 0x76943C0D61395d8F2edF9060e1533529cAe05dE6 (proxy)
• L2ERC20TokenBridge: 0x8E01013243a96601a86eb3153F0d9Fa4fbFb6957 (proxy)
• WstETH on Optimism: 0x1F32b1c2345538c0c6f582fCB022739c4A194Ebb (proxy)

And deploy new contracts needed to deliver the token rebases:

• stETH on Optimism (behind a proxy)
• TokenRateOracle (behind a proxy)
• TokenRateNotifier
• OpStackTokenRatePusher

Last but not least, the newly deployed TokenRateNotifier will be proposed as the postTokenRebaseReceiver instead of the discontinued LegacyOracle.

The contract specification details can be found in the LIP-22: stETH on L2.

There are two audit reports available covering the same final commit of the implemented smart contracts:

• Ackee Blockchain Audit Report
• MixBytes Audit Report

Motivation on wstETH vs stETH

The wstETH token has been successfully integrated on various L2s: Optimism, Arbitrum, Base, zkSync Era, Linea, and Mantle. It provides the ultimate ease for DeFi integrations by being a straightforward value-accruing token using the ‘lock-and-mint’ L1→L2 bridging approach.

In contrast to wstETH, stETH depends on the rate changes to recalculate each user’s balance (e.g., perform a rebase). There is an essential UX property: the stETH token balance represents the underlying Ether value expected to be redeemed 1:1 via the protocol upon a withdrawal request.

Beyond just updating an account’s balance in the wallet, having rebaseable stETH on L2 hypothetically unlocks the following use cases and scenarios:

• staking/withdrawal requests originated from L2s with accuracy accounting for the stETH rebases that occurred during the bridging period
• performing gas payments in stETH with amounts corresponding to ether on rollups that opted in to support token gas payments (e.g., following the Account Abstraction)
• cross-domain stETH deposits/withdrawals (L1 and L2s) for CEXes, custodians, and service providers to support L2s directly (DeFi interactions, deposits/withdrawals) as they can charge fees with each rebase while users still see their balance changing each day
• once main routine user activity migrated from L1 to L2, there should be UX available as it was previously (rebaseable token)

Optimism implementation as a pilot

Recently, Optimism adopted a permissionless fault-proof system, reaching Stage 1 of the rollup security model. For details, see the updated Optimism assessment on L2Beat. This indicates that the Optimism network implements a strong security baseline and is committed to moving toward further decentralization. The latter provides a strong argument to consider Optimism being a pilot network to have a rebaseable stETH token available outside of Ethereum Mainnet. Moreover, the implemented solution is compatible with the OP stack and can be deployed on Superchain networks (Optimism, Base, Mode, etc.) with zero or minimal modifications.

Proposal actions

If this snapshot vote is approved, the on-chain wstETH on Optimism upgrade voting (together with connecting necessary rebase-passing contracts) will occur after:

• testnet tryouts on Sepolia
• security checks are successfully completed
• upgrade action plan presented on the research forum (including timelines, and pre- and post- on-chain vote actions if needed)