Summary
The objective of this proposal is to launch the following High Leverage Strategies (HLS) on Neutron:
- stATOM/ATOM LP token collateral with ATOM debt;
- stATOM collateral with ATOM debt;
where:
- stATOM is a token issued by Stride to represent the staked ATOM tokens;
- stATOM/ATOM LP is the LP token for Astroport xyk pool.
Risks
The implementation of this proposal comes with two new types of risk:
- Smart contract bugs: There’s always the possibility of unforeseen implementation bugs and smart contract vulnerabilities. The materialization of these risks could translate into loss of funds for users. While the code being used has been audited, this obviously doesn’t guarantee that it’s free from bugs. As such, we suggest caution when using this new feature, especially within the first months of its implementation.
- Risk parameter-related vulnerabilities: If the risk parameters are set too aggressively, the liquidations system might not work properly which could translate into protocol insolvency. While we believe the proposed parameters are conservative enough, users should always have this risk present when using the protocol.
- Higher leverage means a greater likelihood of liquidation, which poses risk to users of the HLSs and to the Mars system (risk of bad debt if liquidations do not occur as expected/desired).
Risk Parameters Suggestion
| Parameter | stATOM collateral with ATOM debt | stATOM/ATOM LP collateral with ATOM debt |
|---|---|---|
| Max. LTV | 89.5% | 89.5% |
| Liquidation LTV | 90% | 90% |
| Deposit Caps | - | 30,000 LP |
| Liquidation Parameters: | ||
| Starting LB | 0 | 0 |
| Slope | 2 | 2 |
| Max. LB | 0.2 | 0.2 |
| Min. LB | 0.05 | 0.05 |
| Target Health Factor | 1.05 | 1.05 |
| Protocol Liquidation Fee | 0.25 | 0.25 |
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, stATOM, and ATOM. 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. Delphi Labs may lack access to all relevant facts or may have failed to give appropriate weighting to available facts. Delphi Labs is not making any representation, warranty or guarantee regarding the accuracy or completeness of the statements herein, and Delphi Labs 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.