Summary
This proposal recommends launching isolated SNEK markets on Liqwid by deploying:
- A new SNEK pool with no supply cap.
- A new isolated ADA pool.
- A new isolated USDCx pool.
- qSNEK as collateral for borrowing ADA and USDCx.
The proposal builds on Liqwid’s isolated-market framework, keeping SNEK-related risk separate from the core market while supporting higher-risk, higher-yield lending.
Market Reasoning
SNEK is one of Cardano’s most recognized and liquid native tokens, but its volatility and liquidation risk require conservative limits in Liqwid’s core market.
An isolated structure would allow users to borrow ADA or USDCx against SNEK without exposing core-market lenders to that risk. It would also create new protocol revenue, offer higher-yield opportunities to lenders, and establish a repeatable framework for other long-tail Cardano assets.
Market Design
SNEK Pool
- Asset: SNEK
- Market type: Isolated / secondary market
- Supply cap: None
- qToken: qSNEK2
- Collateral usage: Enabled for borrowing ADA and USDCx in the isolated markets
ADA Pool
- Asset: ADA
- Borrowable against: qSNEK2
- Net margin: 5%
- Borrow cap: 95%
- Maximum LTV: 50%
- Liquidation threshold: 66%
- Optimal utilization: 90%
- Base rate: 3%
- Rate at optimal utilization: 8%
- Rate at maximum utilization: 40%
USDCx Pool
- Asset: USDCx
- Borrowable against: qSNEK2
- Net margin: 5%
- Borrow cap: 95%
- Maximum LTV: 45%
- Liquidation threshold: 65%
- Optimal utilization: 90%
- Base rate: 4%
- Rate at optimal utilization: 10%
- Rate at maximum utilization: 40%
Final parameters should be reviewed by Liqwid risk contributors before deployment.
Risk and Loss Socialization
These markets carry higher risk than Liqwid’s core markets due to SNEK’s volatility, liquidity, and liquidation depth.
Any bad debt should be contained within the affected isolated pool through qToken exchange-rate loss socialization. Losses in the isolated ADA or USDCx pool should not affect Liqwid’s core markets or the other isolated borrowing pool.
Users should be clearly informed that lenders may incur proportional losses if liquidations fail to fully repay outstanding debt.
Technical Considerations
Implementation requires Liqwid developers to:
- Deploy the isolated SNEK, ADA, and USDCx pools.
- Enable qSNEK2 as collateral for ADA and USDCx borrowing.
- Launch the SNEK pool without a supply cap.
- Configure the proposed interest-rate and collateral parameters.
- Apply a 5% net margin to both borrowing pools.
- Maintain the admin multisig loss-socialization functionality.
- Clearly distinguish isolated markets and disclose their higher risks in the UI.
Conclusion
Launching isolated SNEK/ADA and SNEK/USDCx markets would allow SNEK holders to access both ADA and stablecoin liquidity while preserving the conservative risk profile of Liqwid’s core market.
The proposal expands protocol usage and revenue while containing SNEK-related risk within dedicated isolated pools.