This is a proposal for creating a new liquidity market to support USDC token for lending and borrowing on the Liqwid protocol.
Project and Token Overview
USDC will be brought through the Wanchain bridge on Cardano. (More information here: BTC, ETH, USDC and USDT come to Cardano | Wanchain)
USDC Market Reasoning
The USDC token is listed on many CEX/DEX, has a good reputation and a total market cap around $26 billions. (source: https://www.coingecko.com/en/coins/usd-coin and https://defillama.com/stablecoin/usd-coin)
It means that if the USDC 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 the slippage would be low because of these arbitrageurs.
USDC 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. (Website: https://www.wanchain.org/)
The current bridge is accessible there: https://bridge.wanchain.org/
Suggested USDC Market Parameters
In comparison with the DJED market, the proposed USDC interest rate model is having a steeper slope after the kink.
Interest rate market parameters:
- BaseRate: 2.00%
- RateNormal: 4.00%
- RateJump: 5.00%
- Kink: 75.00%
- 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: 5.00%
- DAO Factor: 5.00%
- LQ stakers: 10.00%
[Edit: 14 August 2023] $USDC is not accepted as collateral. The $USDC will be like the $iUSD.
The proposed USDC risk parameters are:
- Collateral factor ( maxLTV): 72.19%
- Liquidation threshold: 77%
- Liquidation discount: 10%
The Liqwid Labs developers have already completed the technical requirements to list any tokens. Following this temperature check, the team will work on USDC preparation work including: 1) testing the proposed interest rate model, 2) completing the off-chain updates to support multiple collateral asset loans and 3) configuring the oracle price feed.
The Core Team recommends the adoption of this proposal and to add $USDC token for supplying and borrowing on Liqwid with the proposed market parameters. We note that $USDC will not be accepted as collateral (edit 14 August).
- Yes, I support the adoption of this proposal
- No, I do not support the adoption of this proposal