[MRC-25] AXL Listing


This governance proposal seeks to add AXL as a collateral asset within the Red Bank. Incorporating this asset could enhance the utility and liquidity of the Red Bank.


We believe listing AXL may generate additional organic demand for the Red Bank.


As a Peer-to-Pool money market, every asset added to the Red Bank increases the risk to the protocol. Given that these risks could materialize in systemic ways—where one weak asset could significantly impact the entire protocol—the Martian Council must carefully balance the addition of new assets with the additional risk assumed by the protocol. We believe these decisions should not be taken lightly.

In the following sections, we assess the technical risk, centralization risk, market risk, and oracle risk associated with listing this asset based on the Risk Framework. And finally, we suggest the risk parameters the Martian Council should consider for both assets.

Technical Risk

Metric Requirements Axelar Network
Time Since Launch Ideal The Axelar Network has been launched since February 2022. The AXL token was launched afterwards, in September 2022.
Custom Public Audit Ideal The Axelar Network has had 27 public audits available here.
Recent Audit Ideal Eighteen of the audits have occurred in the last year.
No Critical Vulnerabilities Ideal No critical vulnerabilities have been exploited.
Bug Bounty Program Ideal Their ImmuneFi bug bounty program of $2.25m covers over 2% of their total value locked of $105m.

Centralization Risk

Metric Requirements Axelar Network
Owner Decentralization Ideal The Axelar Network itself is decentralized and governed by AXL holders. The AXL tokens are distributed over time to the core team, operators, investors, and community programs.
Admin Decentralization Not met. The Gateway contracts custodying transferred assets are controlled by a multisig contract. Details of key holders are not published, however information about their team members can be found here. Since current affiliation of key holders is not known, this category is not met. In the future, the Gateway contracts are planned to be decentralized to the control of the Axelar Network.
Other permissioned addresses Ideal No other permissioned addresses.

Oracle Risk

A 30 minute geometric mean TWAP taken from the Osmosis AXL/OSMO pool is proposed as the price source for AXL. As such, the price will be obtained directly on-chain and is exposed to the same centralization risks as the Osmosis chain itself.

Having said that, there are other oracle related risks worth highlighting. Specifically, oracle manipulation attacks have been among the most common vulnerabilities used by attackers to exploit lending protocols. These attacks broadly consist of 2 steps: 1) Manipulating the price feed used by the protocol (either artificially increasing or decreasing the price of the asset); and 2) Exploiting that artificial price to borrow more assets than the collateral deposited in the protocol would have allowed under normal circumstances.

These attacks have been relatively common and can expose the protocol to systemic risk. Having said that, we believe they are mitigated by:

  • There’s currently 2M in liquidity in the AXL/OSMO pool on Osmosis, from where the price of AXL will be retrieved. We believe this level of liquidity, coupled with the proposed LTV, offers a sufficient level of manipulation resistance for the feed. For instance, a 30 block (~3 minutes, conservative) upwards price manipulation attack, without any arbitrage (very conservative as it makes the attack cheaper) would require a minimum of ~54M USD worth of OSMO to perform profitably. Additionally, it would require that the attacker holds AXL as collateral in excess of the proposed deposit cap.
  • The deposit cap both reduces the size of a potential attack (both from upwards and downwards price manipulation attacks) and mitigates an attacker being able to amass a significant synthetic AXL position by looping the asset multiple times (see here for an example of the attack).

For the above reasons, we believe the proposed oracle implementation for AXL is robust.

Market Risk

The following metrics were calculated to determine the LTV of AXL, according to the Mars Risk Framework:

  • Daily 95% Conditional Value-at-Risk (CVaR, 365-days): 7.01%
  • Maximum intraday drawdown (90-day): 13.01%
  • Median 24hr volume (365-day): $1,571,183
  • Median 24hr market capitalization (7-day average, 90-days): $74,412,323
  • Average high-low percent quoted spread (30-day): 1.13%
  • Amihud’s illiquidity measure (90-day): 1.39e-8

Based on these quantitative metrics, in the next section we propose the LTV and other associated risk parameters.

Risk Parameters Suggestion

Max Loan-to-Value: 44%
Liquidation Loan-to-Value: 45%
Liquidation Bonus: 12.5%
Deposit Cap: 200,000 AXL

Interest Rate Parameters:

  • Optimal Utilization: 60%
  • Base IR: 0%
  • Slope 1: 17%
  • Slope 2: 300%

Usable as collateral? Yes
Available to borrow? No


Execute the Red Bank contract with the following message to initialize the AXL market:

  "init_asset": {
    "denom": "ibc/903A61A498756EA560B85A85132D3AEE21B5DEDD41213725D22ABF276EA6945E",
    "params": {
      "reserve_factor": "0.2",
      "max_loan_to_value": "0.44",
      "liquidation_threshold": "0.45",
      "liquidation_bonus": "0.125",
      "interest_rate_model": {
        "optimal_utilization_rate": "0.6",
        "base": "0",
        "slope_1": "0.17",
        "slope_2": "3"
      "deposit_enabled": true,
      "borrow_enabled": false,
      "deposit_cap": "200000000000"


This proposal is being made by Delphi Labs Ltd., a British Virgin Islands limited company. Delphi Labs engages in incubation, investment, research and development relevant to multiple ecosystems and protocols, including the Mars Protocol. Delphi Labs and certain of its service providers and equity holders own MARS tokens and have financial interests related to this proposal. Additionally, Delphi Labs is one of several entities associated with one another under the “Delphi Digital” brand. Delphi Digital’s associated entities and/or equityholders or service providers of such entities may hold MARS and may have financial interests related to this proposal. All such entities, service providers, equity holders and other related persons may also have financial interests in complementary or competing projects or ecosystems, entities or tokens, including Osmosis/OSMO. 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.


Looks good, am in favour of a low cap on this.

I have a question regarding the interest rate params - what is the reason behind optimal utilisation rate of 0.6? Concerns about liquidity risk? With a slope_1 of 10%, I wonder if this would result in pretty low returns for lenders vs what they accrue staking and make it hard to attract or retain liquidity without incentives.


Hey ser, thanks for the comment!

On the 60% optimal utilization: Setting this parameter is more art than science, but you’re right, it’s related to liquidity risk. What we want to avoid here is ever reaching 100% utilization, which effectively blocks liquidations from happening. The lower the optimal utilization, the more a scenario like that is mitigated since the earlier the second slope kicks in.

On the 10% slope1: You’re right. The current staking APR on AXL is ~13% and ideally the deposit interest rate at optimal utilization is closer to that 13% (or higher) so depositors are properly incentivized to deposit on the Red Bank. In this sense, I think it’d make sense to increase it to 17%.

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Updated slope_1 to 17% as a result of above conversation

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