Proposal:
The protocol proposes to list wstETH on 0VIX for lending and borrowing.
This comprises of the following vote:
- Whether to list wstETH with a 50% max LTV on 0VIX Protocol as an asset for lending and borrowing.
Motivation:
0VIX recently added Lido Finance’s stMATIC with great success. It grew to a supply market size of $2.2M and a utilization rate of 45%. The wstETH token is the first liquid staking derivative of ETH on Polygon and it is issued by the Lido DAO. They currently hold more than $9 billion in Total Value Locked with more than 280k stakers managing ~30% of all the ETH staked on Ethereum mainnet and more.
By adding wstETH to 0VIX, the Protocol would open avenues for leveraged staked ETH strategies on Polygon.
Details:
Lido’s wrapped stETH (wstETH) is stETH which is deposited into the stETH wrapper. Wrapping stETH creates a DeFi-compatible version of the stETH token which allows for easier integrations with DeFi protocols. While the asset carries theoretical structural risks due to the token being a bridged derivative product whose underlying is held in a trustless wrapper, these risks cannot be mediated by LTV parameter tuning. We believe these structural risks are effectively ‘priced in’ by DeFi users and, as such, continue trusting the long-standing stability of the asset.
The main depeg risk for wstETH would result from a slashing penalty incurred by its validators on Ethereum. Given the extensive validator set offered by the Lido DAO, a majority of validators would need to be slashed for a sufficient depeg event to take place.
Following the recent addition of wstETH to Polygon, the on-chain Total Value Locked (TVL) in liquidity pools is currently low, resulting in a potential for price manipulation attacks. Given the ample liquidity present on Ethereum mainnet, the risk is expected to eventually subside.
Therefore the proposed starting LTV parameter is set conservatively to 50%
Links:
Website: https://lido.fi/
Dune: Lido Dashboards Catalogue
Quorum Standards
The options with the most votes will be adopted.
Voting period:
- 2 days
Vote options:
- Accept the proposal: Yes
- Further discussion needed
0 voters