This is a proposal for creating a new liquidity market to support SHEN reserve coin lending and borrowing on the Liqwid v1 protocol.
Project and Token Overview
SHEN is the reserve coin of the DJED stablecoin protocol. The minted DJED is backed by ADA and uses SHEN as its reserve coin. DJED is a Cardano native overcollateralized stablecoin implemented by the Coti and IOG engineering teams. The protocol is unique for its 400-800% minimum collateral ratio for minting DJED. As SHEN forms the backbone of the DJED stablecoin protocol and trades close to the price of ADA, it makes for a secure collateral type for Liqwid users to lend and borrow with.
Smart Contract Risk of the DJED stablecoin protocol - DJED/SHEN smart contracts were built by IOG and audited by Tweag. The full audit report can be found here: tweag-audit-reports/Djed-2023-01.pdf at main · tweag/tweag-audit-reports · GitHub .
While the smart contracts are built by IOG and audited by Tweag the protocol has been live on mainnet for just over one month.
The circulating supply of SHEN is 23,696,178.31 with 15,040,919.49 additional SHEN able to be minted now at current reserve ratio. Much of the minted SHEN is held in wallets as the on-chain liquidity on DEXs is more limited (WingRiders ADA/SHEN pool has ~$2.52m in liquidity, Minswap ADA/SHEN pool has ~$690k in liquidity)
The following chart from Coti shows when SHEN is able to be minted and burned based on the protocol’s collateral ratio:
The Liqwid Labs developers have completed majority of the New Market support tasks needed to list the SHEN market including: testing the proposed interest rate model and risk parameters, configuring the SHEN oracle price feed, confirming SHEN token properties relevant for listing.
Suggested SHEN Market Parameters
The proposed SHEN interest rate algorithm parameters and resulting interest rate curve are as follows:
The proposed SHEN risk parameters are as follows:
*Any updates to this proposal will be labeled as Amendments.
Do you support this proposal to add support for SHEN lending and borrowing on Liqwid v1?