[MRC-129] wstETH Deposit Cap Increase

Proposals MRC (Mars Request for Comment)
1

Summary
This proposal aims to increase the wstETH deposit cap from 50 to 100 wstETH on the Neutron outpost of the Red Bank.

Motivation
The cap for wstETH has been 100% hit which indicates the demand for the use of this token on the Red Bank’s Neutron Outpost.

WstETH allows users to effectively use a representation of ETH across DeFi without sacrificing the staking rewards. As such, this removes the current cost of opportunity of using ETH across DeFi and could catalyze more organic usage for the Red Bank.

Risks
The dominant risk associated with this action is that an increase in the caps for a given asset can result in an overexposure to said asset. Capping exposure allows Mars to reduce risk associated with asset price manipulation, extreme price volatility, and abnormally high swapping fees (lack of liquidity), among others. These issues could be detrimental to Red Bank in terms of insolvencies and liquidations.

Deposit Caps Risk Framework is developed to manage those risks. We ensure that the increased caps do not exceed the maximum allowable caps as per the framework.

Implementation
The following message(s) will be executed:

  1. neutron1x4rgd7ry23v2n49y7xdzje0743c5tgrnqrqsvwyya2h6m48tz4jqqex06x
{
  "update_asset_params": {
    "add_or_update": {
      "params": {
        "denom": "factory/neutron1ug740qrkquxzrk2hh29qrlx3sktkfml3je7juusc2te7xmvsscns0n2wry/wstETH",
        "credit_manager": {
          "whitelisted": true,
          "withdraw_enabled": true,
          "hls": null
        },
        "red_bank": {
          "deposit_enabled": true,
          "borrow_enabled": true,
          "withdraw_enabled": true
        },
        "max_loan_to_value": "0.73",
        "liquidation_threshold": "0.75",
        "liquidation_bonus": {
          "starting_lb": "0",
          "slope": "1",
          "min_lb": "0.05",
          "max_lb": "0.2"
        },
        "protocol_liquidation_fee": "0.25",
        "deposit_cap": "100000000000000000000",
        "close_factor": "0.5"
      }
    }
  }
}

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 wstETH. 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.

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