This proposal is for creating a new lending and borrowing market to support Ether (ETH) tokens brought through the Wanchain bridge.
Project and Token Overview
ETH will be brought through the Wanchain bridge on Cardano. Wanchain’s decentralised blockchain interoperability network empowers developers to build truly decentralised crosschain applications to power the future of DeFi.
ETH Market Reasoning
The ETH token is the #2 market capitalization in the world with many CEX/DEX listing.
This means that if the ETH tokens would be sold on a DEX or any CEX, following a bridge back from Cardano to Arbitrum or Wanchain, we are confident that liquidators would find enough liquidity and that the slippage would be low because of these arbitrageurs.
Risk Considerations
ETH is existing for many years and has a great success until now. Thus, no major event or information could let us think that this token is exposed to any unknown risk(s).
The Wanchain bridge has been built with IOG and tested successfully. Wanchain is already operating many bridges and did not encounter any issue until now.
The current bridge is accessible there: https://bridge.wanchain.org/
(For more information, visit their website: https://www.wanchain.org/)
Suggested ETH Market Parameters
The proposed ETH interest rate algorithm parameters are:
- BaseRate 3.00%
- utilMultiplier 40.00%
- utilmultiplierjump 1200.00%
- Kink rate 65.00%
These are the same parameters as ADA.
Income Factor: 20.00% (80% of the interests paid by the borrowers are given to the suppliers).
The remaining part is split as following:
- Reserve Factor: 0.00%
- DAO Factor: 10.00%
- LQ stakers: 10.00%
The proposed ETH token risk parameters are:
- Collateral factor (maxLTV): 79.95%
- Liquidation threshold: 80%
- Liquidation discount: 10%
No supply cap will be imposed on ETH, and the borrow cap for ETH tokens will be set at 90% of the total ETH supplied.
ETH will be used as collateral to borrow any Wanchain-bridged assets.
Specifications
Liqwid Labs developers have already fulfilled the technical requirements for listing any tokens. Following this assessment, the team will proceed with the preparation work for listing ETH, which includes: 1) testing the proposed interest rate model, 2) finalizing off-chain updates to support loans with multiple collateral assets, and 3) configuring the oracle price feed.
Conclusion
The Core Team recommends the adoption of this proposal and to add ETH as a token for lending and borrowing on Liqwid with the proposed market parameters.
- Yes, I support this proposal.
- No, I do support this proposal.
