Integrate USDM as Collateral on Liqwid Finance

New Markets
1

Proposal: Integrate USDM as Collateral on Liqwid Finance

I. Introduction

This proposal advocates integrating USDM, the first fiat-backed 1:1 stablecoin native to the Cardano blockchain (CNT), as a collateral option on Liqwid Finance. USDM’s unique features and robust architecture will significantly benefit Liqwid’s users and Cardano DeFi ecosystem.

II. Advantages of Adding USDM as Collateral

Enhanced Stability and Security: USDM’s 1:1 fiat backing minimizes price volatility, offering users a reliable and secure asset to leverage within Liqwid’s lending and borrowing protocols.

Increased Liquidity: Adding USDM as collateral will attract new users to Liqwid, ultimately increasing overall liquidity within the platform. This benefits borrowers by ensuring readily available loan options and lenders by providing attractive interest rates.

Transparency and Verifiability: Mehen, the issuer of USDM, employs a third-party oracle to transparently verify all mints and burns of the token, ensuring users of its legitimacy and stability.

Capital Efficiency: USDM’s design fosters capital efficiency within Liqwid. Users can leverage their USDM holdings to borrow other assets, maximizing the utility of their crypto portfolio.

Smart Contract Compatibility: USDM’s inherent composability allows for seamless integration with Liqwid’s smart contracts, facilitating smooth borrowing and lending experiences.

Auditable and Secure Reserves: USDM’s smart contracts have undergone a thorough audit by Sundae Labs, attesting to their security and functionality. Furthermore, Fidelity holds the reserve accounts backing USDM, adding an extra layer of trust and transparency.

III. Conclusion

Integrating USDM as collateral on Liqwid Finance presents a strategic opportunity to bolster the platform’s offerings and solidify its position within the Cardano DeFi landscape. USDM’s stability, transparency, and smart contract compatibility make it an ideal asset for users seeking secure and efficient lending and borrowing opportunities.

By embracing USDM, Liqwid can unlock a new era of financial possibilities for its users and contribute to the broader adoption of digital assets on Cardano.

“With USDM, Mehen is not only offering a stablecoin but also pioneering a new era of digital asset management. By combining financial expertise with blockchain technology, we’re moving global digital asset adoption forward, one USDM at a time.”

USDM Fee Structure from USDM Discord

USDM Fee Structure from X

posted on behalf of the author @Blockjock

'Discord
post

Do you support Proposal: Integrate USDM as Collateral on Liqwid Finance

[poll** type=regular results=always public=true chartType=bar]

  • Yes
  • No
    [/poll]
14 Likes
2

Yes . I Agree usdm …

4 Likes
3

My vote is YES!!! USDM in Liqwid now!!!

2 Likes
4

Let’s do this! :muscle:t3::muscle:t3::muscle:t3::muscle:t3::muscle:t3::muscle:t3::muscle:t3::muscle:t3:

3 Likes
5

Easy yes vote again for me!

Would love the addition of using some of the DAO earned stables (excluding iUSD as I think DAO can make some easy returns waiting for iUSD regaining it’s peg) to seed the USDM market :droplet:

6 Likes
6

Definitely YES! :muscle::muscle::muscle::muscle::muscle:

2 Likes
7

I would say yes but obviously not yet. We need to wait and let it develop depth of liquidity on dexes for liquidators. Redemption imposes a minimum $50 fee.

1 Like
8

I think we need to move quickly to strengthen our position

2 Likes
9

I agree this should be thoroughly flushed out and ensure that USDM is ready.
I updated the fees in the original post.

the Burn fee 1.5%
I took the minimum burn fee of $50 and a maximum of $5,000 for individuals who were looking to turn USDM back into Fiat, not necessarily as trading.

My Vote is Yes, as long as this is put through the same rigor as any stablecoin would and not fast-tracked on good faith of the USDM team or references from other projects that have already vetted it.

5 Likes
10

As a team member of USDM I also agree with Conkey surrounding depth of market and the soundness of USDM within the mkt itself, there is also work being done to include a secondary oracle data feed so that:

-Enhanced Data Verification:** By comparing data feeds from two oracles, the system can identify potential discrepancies or outliers. This redundancy helps to detect and prevent attempts to manipulate the price feed and destabilize the peg.

-Improved Market Coverage:** Two oracles can potentially gather data from a wider range of sources, leading to a more accurate reflection of the underlying fiat currency’s value. This can be particularly important in volatile market conditions.

-Decentralization:** Utilizing multiple oracles fosters a more decentralized architecture for the stablecoin. This reduces reliance on any single entity and aligns with the core principles of blockchain technology.

I cant identify second oracle were talking to but were already in talks with them.

8 Likes
11

so were slowly trucking upwards in liquidity, curious everyones thoughts on the reliability of USDM as a stable and how sentiment is going for the Liqwid community.

3 Likes
12

This os the way! Creating USDM market belonging to DAO would make LQ holder more appealing as it will be attached to LIqwid USD treasury and interest…

3 Likes
13

With the recent announcement of our listing on a NBX a centralized exchange based in Norway and the exposure to the 27 countries in the european union, along with the first of its kind direct investment from the Minswap Dao into a USDM/ADA pool. I would argue we are instilling confidence in not only our nascent Defi ecosystem but Cardano as a whole. The support (no matter how small) shows a united front amongst those of us building in this Eco, its time for us to work together and spread the message of solidarity within all of us working on Cardano
[/quote]

3 Likes
14

There was some good chatter about this in Discord the other day. I know you were there, I just wanted to capture it for the forum here.

A couple of takeaways/milestones to achieve to increase integration.

  • Minimum on-chain liquidity $500k, more the better
  • working oracle, not named Charli3 <–this is needed for any adoption to take place (updated 5/8/24)
  • Coingecko listing
  • Launch as supply/borrow but not as collateral could happen first

Link to Discord chat for others to reference

4 Likes
15

Supply/Borrow is where we want to be I think in the short term, so lets brainstorm a bit here on what that looks like and then we can add a separate proposal.

Here are the potential benefits of adding USDM (a 1:1 fiat-backed stablecoin) to Liqwid Finance on Cardano:

Increased Liquidity and Borrowing/Lending Opportunities:

  • More Users: USDM attracts new users who prefer a stablecoin pegged to the US dollar, potentially increasing overall liquidity on Liqwid. This translates to:
    • More Lenders: More lenders deposit their USDM on Liqwid, offering loan options to borrowers.
    • More Borrowers: Increased borrowing options for users who want to leverage their crypto holdings without worrying about price fluctuations.
  • Improved Borrowing Rates: With a larger pool of lenders and borrowers, competition can drive down borrowing rates for USDM loans, making it more attractive for users.

Enhanced Stability and User Confidence:

  • Stablecoin Advantage: USDM, being a stablecoin, minimizes price volatility compared to other cryptocurrencies. This reduces the risk of sudden price swings that could lead to loan defaults or user losses.
  • Transparency and Trust: USDM’s transparency in reserves and audits can instill confidence in users. They know their holdings are backed by readily available US dollars.

Integration with Cardano Ecosystem:

  • Native Cardano Asset: USDM being a Cardano native token allows for seamless integration with Liqwid’s smart contracts for borrowing and lending. This facilitates smooth transactions with minimal fees.
  • Boosted DeFi Adoption: The addition of USDM can potentially boost the adoption of DeFi services within the Cardano ecosystem by providing a familiar and stable asset for users.

Additional Advantages:

  • Capital Efficiency: Users can leverage their USDM holdings to borrow other crypto assets on Liqwid, maximizing the utility of their crypto portfolio.
  • Wider Fiat Gateway: USDM could act as a bridge between fiat currencies and the Cardano DeFi ecosystem, simplifying entry for users who want to participate with USD-denominated assets.

Overall, adding USDM to Liqwid Finance can create a win-win situation for both platforms: Liqwid gains increased liquidity and attracts new users, while USDM benefits from wider adoption and utility within the Cardano DeFi landscape.

3 Likes
16

What does the team want? Isolated collateral? Different max LTV?

18

It’s time to add USDM as a market on Liqwid.

19

Would love to see USDM added. I understand Charli3 is not an ideal partner in the teams eyes. But is all trust lost or are we willing to look at what they’ve done to prevent future failures?

20

Liqwid Labs core team has been working with Mehen team to sort through all technical requirements needed to launch a new market for lending and borrowing. At this time given USDM onchain liquidity levels and based on the CNT risk framework we feel a supply cap of $2M and a 90% borrow cap is appropriate.

Once technical requirements are completed in the next few weeks an onchain vote for this proposal will be completed. Thanks @ConkeyKong for creating this proposal.

7 Likes
21

The near term plan will be to integrate USDM with a hardcoded value of $1 with a member of the Liqwid core team onboarded in the Mehen app with the ability to complete redemptions if required in the event of large liquidations.

Current USDM onchain liquidity suggests $2m supply cap is a reasonable starting place according to the CNT Risk Framework. 90% Borrow cap applied to all stablecoin markets.

Proposed Collateral parameters:
60% maxLTV
60.1% Liquidation threshold
15% Liquidation penalty

5 Likes