Author: Sperax Core Team Reference: Sperax docs Created: September 21, 2023 Labels: #Product-Features, #USDs-Parameters, #Yield-Strategies

Summary

The Sperax core team proposes:

• Diversification of USDs collateral strategies & automation of new strategy additions
• Restructuring of USDs minting and redeeming fees and related governing rules

Motivation

There have been a lot of constraints with USDs collateral strategies, related fees, and restrictions on specific collateral, among others. Being a liquid token, USDs should provide the freedom to every user to choose their collateral, underlying strategies, and associated risks. With multiple strategies in place, we will also be mitigating risks involved with the collateral and their underlying strategies.

Minting and redeeming fees, associated with USDs, should be dependent upon the collateral composition, market dynamics, and available strategies for any collateral. It should be changed periodically as the governing factors change.

Overview

The core team is proposing certain steps to broaden the collateral associated with USDs and its underlying strategies. The strategies currently implemented are very limited and we are facing higher risks in deploying the collateral currently available in the vault. The collateral basket should include USDT, USDC, USDC.e, DAI, LUSD, FRAX & VST. We must have multiple strategies for each collateral to maximize the yield from the safest strategies available.

USD collateral and underlying strategies

The core team proposes to introduce the following strategies for the seven collaterals mentioned above with a specific allocation cap.

• USDC:

  • Compound (USDC)
  • Aave (USDC)

  Maximum cap of 75% of total USDC collateral for each strategy.

• USDC.e:

  • Compound (USDC.e)
  • Stargate (Stargate-LP USDC.e)
  • Aave (USDC.e)
  • Curve (FRAX-USDC.E)

  Maximum cap of 50% of total USDC.e collateral for each strategy.

• DAI:

  • Aave (DAI)
  • Radiant V2 (DAI)

  Maximum cap of 75% of total DAI collateral for each strategy.

• USDT:

  • Aave (USDT)
  • Stargate (Stargate-LP USDT)

  Maximum cap of 75% of total USDT collateral for each strategy.

• FRAX:

  • Frax (Curve-LP FRAX/VST)
  • Curve (FRAX-USDC.E)

  Maximum cap of 75% of total FRAX collateral for each strategy.

• LUSD:

  • Camelot (LUSD-USDC V2 Pool)
  • Aave (LUSD).

  Maximum cap of 75% of total LUSD collateral for each strategy.

We also propose to make USDs collateral selection, underlying strategy selection, and subsequent implementation a governance-less process. This decision is to counter unexpected market conditions and safeguard the collateral. This will help in the smooth introduction of a variety of strategies catering to different and changing user demands.

Minting and redeeming fees for USDs

The applicable fee structures for all seven collaterals are mentioned below

The fee structure will be reviewed every two weeks and revised, if needed, after careful consideration of all the criteria. The target is to decentralize and automate this mechanism. It will be dealt with in a future SIP.

Specifications

1. Seven collaterals will be used for USDs which are USDC, USDC.e, USDT, DAI, FRAX, VST, and LUSD.
2. All the strategies mentioned in the overview will be implemented for USDs collateral.
3. Collateral selection, strategy selection, and implementation will be a governance-independent process.
4. Restructure the minting and redeeming fees of USDs for all the collaterals as mentioned in the overview.
5. Revision of the minting and redeeming fees of USDs for all the collaterals, every two weeks, if warranted by the market dynamics and collateral composition.

Voting

For: Approve the proposal Against: Don't make the changes