SIP-50: Add LUSD as collateral and use it in yield strategies

Author: Sperax Core Team Reference: Liquity, Camelot exchange, Ramses exchange, Chronos exchange Created: July 10, 2023 Labels: #New-Assets, #Yield-Strategies

Simple Summary

Decentralization is the key priority for Sperax.

The major stablecoins whitelisted as USDs collateral - USDC and USDT - are not fully decentralized. Thus, the Team offers to add to the collateral basket a decentralized stablecoin - Liquity USD (LUSD) that would be used on new yield strategies.

Motivation

Currently, the following tokens are whitelisted as USDs collateral: USDC, USDT, FRAX, DAI, and VST.

Though, USDT, USDC, FRAX, and DAI can’t be considered fully decentralized.

To improve the decentralization of USDs, we offer to include a decentralized stablecoin Liquity LUSD (LUSD) in the collateral basket. This addition will make the USDs collateral basket more decentralized and make it possible to add newer more profitable yield strategies to generate yield for USDs and veSPA holders.

Overview

Liquity USD (LUSD) with a market cap of $278M is a decentralized borrowing protocol that allows users to draw interest-free loans against Ether (ETH) which is used as collateral (CDP - collateralized debt position).

Liquity Stablecoin (LUSD) is the native stablecoin of the Liquity protocol. It is designed to maintain its peg to the US dollar through a mechanism that adjusts the supply of LUSD based on market demand.

Though LUSD belongs to the category of “algorithmic stablecoins” - its design is cardinally safer than notorious Terra’s stablecoin UST. UST was collateralized by its governance and value accrual token LUNA (which made the death spiral possible).

On the contrary, LUSD is not collateralized by its value accrual token LQTY. LUSD is overcollateralized by ETH (minimal collateralization rate is 110%) and ETH is the second most trustful crypto asset after BTC.

To generate a yield for USDs and veSPA holders, LUSD can be used for yield strategies. For example, when paired with USDC or USDT, it can earn middle-to-high single digits or low double-digits on non-concentrated liquidity pools like Camelot Exchange (V2) or Ramses Exchange (V1 pools), or Chronos Exchange, and double-digit APR (concentrated liquidity pools) on Ramses Exchange.

Technical Specification

Whitelist LUSD as collateral
Swap a portion of collateral for LUSD
Deploy LUSD in the yield strategies

Voting

For:

Whitelist LUSD (Liquity USD), swap a part of current collateral for LUSD, and deploy LUSD in yield strategies.

Against

Don’t whitelist LUSD

start

July 13, 2023

9:11 AM

end

July 16, 2023

9:11 AM

Voting

off-chain

Voting type

single-choice

Voters

3,478

Votes

427,942,115

Final Votes

closed

For

427.9M veSPA

99.98%

Against

72.8K veSPA

0.02%

item label

Placeholder title of a dao proposal

DAO name

0x000000000000

Mon 00, 2024 00:00

About Voters Analytics

Lorem ipsum dolor sit amet

Lorem ipsum dolor sit amet consectetur adipisicing elit. Veniam maxime tenetur saepe, debitis quae quos vitae cum obcaecati recusandae suscipit magni delectus sit animi quam veritatis aut, numquam illo voluptatem! Lorem ipsum dolor sit amet consectetur adipisicing elit. Veniam maxime tenetur saepe, debitis quae quos vitae cum obcaecati recusandae suscipit magni delectus sit animi quam veritatis aut, numquam illo voluptatem!

Voting

100,000

Voting type

100,000

Starts in

100,000

Voters

1,000,000

Votes

1,000,000

Votes

Choice label

TICKER

100%

Choice label

TICKER

100%

Choice label

TICKER

100%