Summary
The objective of this proposal is to list nobleUSDC as a collateral and borrowable asset on the Neutron outpost of the Red Bank.
Motivation
USDC is the fundamental asset that allows for margin trading on credit accounts. Specifically, users looking to margin long a certain asset will borrow stablecoins to buy that asset and users wanting to short a certain asset will borrow the asset to sell it for stablecoins.
NobleUSDC is the official version of USDC on Cosmos, as it’s directly minted by Circle and its authorized parties.
NobleUSDC liquidity has significantly increased recently on Neutron since Drop launch: there’s currently ~6M in liquidity in the USDC/dATOM pool on Astroport which allows to list this token as collateral on the Neutron outpost of the Red Bank.
As such, we believe that listing of USDC will increase organic usage of the Red Bank on Neutron.
Risks
The following sections cover some known risks of listing the token.
Technical and Centralization Risks
Technical and Centralization Risks associated with nobleUSDC are explored in the governance proposal [MRC-48].
Oracle Risk
We propose to use the Pyth USDC/USD feed to price nobleUSDC.
Note that while nobleUSDC is the official version of USDC on Cosmos, the price of nobleUSDC could potentially deviate from the overall price of USDC in the market (which includes CEXs and other onchain markets like Ethereum). If this were to happen, the Pyth feed probably wouldn’t reflect this divergence, which could translate into issues for Mars.
Risk Parameters Suggestion
The following parameters are the same as those on Osmosis and follow the guidelines suggested by the Mars Risk Framework and are in line with those for nobleUSDC on Osmosis:
- Max. LTV: 79.5%
- Liquidation LTV: 80%
- Deposit Cap: 1,000,000 USDC
- Interest Rate Parameters:
- Optimal Utilization: 80%
- Base IR: 0%
- Slope 1: 12.5%
- Slope 2: 200%
- Liquidation Parameters:
- Starting LB: 0
- Slope: 1
- Max. LB: 0.2
- Min. LB: 0.05
- Target Health Factor: 1.05
- Protocol Liquidation Fee: 0.25
- Reserve Factor: 10%
- Usable as collateral? Yes
- Available to borrow? Yes
Implementation
This is a signaling proposal, not an executable proposal.
The Mars smart contracts on the Neutron chain are currently controlled by the Builder Multisig address. If this proposal passes, the builders will utilize their multisig to make the necessary parameter changes.
Copyright
Copyright and related rights waived via CC0.
Disclaimers/Disclosures
This proposal is being made by Mars Protocol Foundation, a Cayman Islands foundation company. Mars Protocol Foundation engages in research and development of the Mars Protocol. Mars Protocol Foundation and certain of its service providers and managers own MARS tokens and have financial interests related to this proposal. The aforementioned persons or their affiliates may also have financial interests in complementary or competing projects or ecosystems, entities or tokens, including NTRN and USDC. These statements are intended to disclose relevant facts and to help identify potential conflicts of interest, and should not be misconstrued as a complete description of all relevant interests or conflicts of interests; nor should they be construed as a recommendation to purchase or acquire any token or security.
This proposal is also subject to and qualified by the Mars Disclaimers/Disclosures. Mars Protocol Foundation may lack access to all relevant facts or may have failed to give appropriate weighting to available facts. Mars Protocol Foundation is not making any representation, warranty or guarantee regarding the accuracy or completeness of the statements herein, and Mars Protocol Foundation shall have no liability in the event of losses or damages ensuing from approval or rejection or other handling of the proposal. Each user and voter should undertake their own research and make their own independent interpretation and analysis of all relevant facts and issues to arrive at their own personal determinations of how to vote on the proposal.