Summary
This is a proposal for creating a new liquidity market to support USDT token for lending and borrowing on the Liqwid protocol, but not as collateral.
Project and Token Overview
USDT will be brought through the Wanchain bridge on Cardano. (More information here: BTC, ETH, USDT and USDT come to Cardano | Wanchain 3)
USDT Market Reasoning
The USDT token is listed on many CEX/DEX, has a good reputation and a total market cap around $83 billions. Source: https://www.coingecko.com/en/coins/tether and https://defillama.com/stablecoin/tether.
It means that if the USDT tokens would be sold on a DEX or any CEX, following a bridge back from Cardano to Arbitrum/Polygon or Wanchain, we are confident that liquidators would find enough liquidity and the slippage would be low because of these arbitrageurs.
Risk Considerations
USDT 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. (see Website)
The current bridge is accessible there: https://bridge.wanchain.org/ and the list of USDT tokens accepted from other chains to Cardano is here.
Suggested USDT Market Parameters
The proposed USDT interest rate model is the same interest rate model as iUSD and USDC.
Interest rate market parameters:
BaseRate: 2.00%
RateNormal: 4.00%
RateJump: 400%
Kink: 65.00%
Interest rate model for USDT given its utilization rate
Income Factor: 20.00% (80% of the interests paid by the borrowers are given to the suppliers).
The remaining part is split as follows:
Reserve Factor: 10.00%
DAO Factor: 0.00%
LQ stakers: 10.00%
$USDT is not accepted as collateral, same as iUSD or USDC.
Specifications
Following this temperature check, the Core team will work on USDT preparation work including: 1) configuring the oracle price feed, 2) completing the off-chain updates and 3) testing the market parameters (incl. interest rate model).
Conclusion
The Core Team recommends the adoption of this proposal and to add $USDT token for supplying and borrowing on Liqwid with the proposed market parameters**. We note that $USDT will not be accepted as collateral.**
- Yes, I support the adoption of this proposal
- No, I do not support the adoption of this proposal
But please, move previous tempchecks onchain like WMT, iBTC and iETH etc as there is existing volume and the tempchecks are incredibly in favour of those already. Preferring wanchain seems like you guys are benefitting for pushing these assets first.