[MRC-91] WBTC (Native) Listing - Osmosis Outpost

[MarsFoundation]

Summary

The objective of this proposal is to list native WBTC on the Osmosis outpost of the Red Bank.

Motivation

Axelar WBTC has been listed on the Osmosis outpost of the Red Bank since launch. Since then, it has been organically used within the protocol. The objective of this proposal is to launch the native version on Mars, which we hope can promote further use of the asset within the protocol.

Oracle

We propose to use the WBTC/USD price feed from Pyth.

Risk Parameters Suggestion

Following the methodology suggested by the Mars Risk Framework, we propose the following parameters:

• Max. LTV: 78%
• Liquidation LTV: 80%
• Deposit Cap: 20 WBTC
• Interest Rate Parameters:
  • Optimal Utilization: 60%
  • Base IR: 0%
  • Slope 1: 10%
  • Slope 2: 300%
• 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 Osmosis 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 Neutron/NTRN, 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. 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.

[marty]

Can we also please list wstETH (Osmosis outpost)?

[dancreee]

Hey @marty - interested in how you plan to utilise wstETH in Mars V2 - it’s on the Neutron outpost already, and the liquidity is better on the Neutron outpost, the deposit cap would be relatively small with the current liquidity levels on Osmosis - but could be worth considering.

Enabling wstETH could mean we can also enable high leverage staking on the wstETH-WETH pair, however the borrow cost of ~4.5% on WETH rn doesn’t really make this profitable

[marty]

Hey @dancreee, thanks for the response. I am sorry it took me so long to come back to this.

I use ETH on Mars v2 Osmosis outpost as my main collateral to borrow stables against. It’d be great to be able to use wstETH for the extra yield. Osmosis is where most of the stablecoin liquidity is, where the liquidity is for most of the assets I trade (wBTC, AXL, TIA, etc), also the borrow rate for stables is much less volatile compared to Neutron. I’d like to be able to swap the ETH I am currently using as collateral in my credit account to wstETH without having to withdraw/unwind/bridge it to a different chain first for UX reasons. I understand that the wstETH liquidity is still a bit behind Neutron’s, but the Osmosis pool / incentives are relatively new & liquidity has been growing fast. I am sure it’d be a popular collateral asset & no harm starting with conservative caps if the risk framework calls for it, right? Thank you for the consideration.

[marty]

This proposal to list wBTC (native) passed governance on March 30th.
Why has the builder multisig not made the parameter change after all this time?

https://wallet.keplr.app/chains/mars-hub/proposals/183

[dancreee]

It’s fair point, the deposit cap would have to be quite small so a bit underwhelming but at the same time if it allows some users to utilise Mars better def worth consideration… I’ve asked the risk team their thoughts on this also

[dancreee]

It’s executed/added now, some of the Mars Contributors (Mars Protocol Foundation) have been unplugged while on a work retreat (where we were working on some awesome stuff we can hopefully share soon!) so we’ve been a bit behind the ball on governance, should be catching up on everything within the next week

[marty]

Hey,

has the risk team gotten a chance to give their thoughts on this? The wstETH liquidity situation on Osmosis has improved this past month - ~$1.4m well positioned liquidity in the wstETH/ETH pool & a new wstETH/USDC pool seeded with incentives which already seems to be gaining traction.

This is not too far off from the current wstETH/ETH liquidity on Neutron w/ a deposit cap of 50 wstETH on its outpost:

Thanks!