Summary
This proposal is proposed by Sam Lekhak, BD Contributor at Liquity and myself, it seeks both community and team approval to begin integrating BOLD on Fluid. This proposal highlights the first step of this integration : a USDC/BOLD DEX pool. Next steps will be clarified later in coming proposals.
Context and Motivation
Liquity has been the pioneer in decentralised CDP architecture. Their v1 was the birthplace of the most decentralised stablecoin ever created : LUSD. Confronted by the lack of yield for stablecoin holders of their first version leading to the creation of a crystal roof, Liquidity team is finally releasing the second version of their CDP. This version will be immutable like the last one preserving users from rules changing potentially harming them and providing a great security environment already battle-tested by plenty of auditors. Through this version, Liquity is shipping a new Primitive : Users set interest rates. Meaning that users will be able to chose themselves their own terms for their borrowing positions. Setting your interest rate too low exposes your position to be redeemed while setting it higher protects it from being redeemed and protects BOLD from being underpeg because 75% of the interest rates of the protocol goes to the stability pool. All these game theory mechanisms aim to make BOLD revolve around the peg while its hard peg limits are respectively 0,995-1,10 dollar.
While 75% of the interest rate of the protocol are redirected toward the stability pool, the other 25% are used for Protocol Incentivised Liquidity, meaning that Liquity token stakers decide through vote where these incentives are gonna be directed. This proposal make sense for 3 reasons :
- Supporting the core DeFi values(decentralization, immutability, accessibility and game theory) through one of the best stablecoin of this industry.
- Offering Liquidity Providing products to a native on-chain stablecoin.
- Being a candidate for PIL making this pool an incentivised pool without Fluid intervention.
Proposal
Create a BOLD/USDC pool on Fluid DEX. Here are the proposed parameters but this parameters are just a proposition ready to be changed to suit better the market conditions and the needs of such a product as BOLD.
BOLD/USDC Pool :
Trading Fees : 0,02%
Trading range : 0,2% depth(0,1% lower bound and 0,1 % upper bound)
Revenue cut at the start of the pool : 0%
Starting deposit ceiling : 10M$
Expand Percentage : 50 %
Expand duration : 1 hour
These parameters are opened to any modification propositions. The 2bps fees instead of 1bps(mostly used for stablecoin LPing) is because BOLD isn’t as stable as centralized well know stablecoins like USDT or USDC, so this fees parameter reflect the risk taken by liquidity providers. Furthermore, this 2bps trading fees will be lower than Curve pool fees(0,04%) and also lower than uniswap v3 fees(0,05% mainly used for LUSD Lping at the time on mainnet, yesterday a BOLD pool was created on uni v3 featuring too, a 5bps trading fee) permitting for Fluid to be the best swap route.
Details Concerning the next Steps
This is only the first step of the Fluid<>Liquity collaboration, next envisaged steps are :
- Candidature of this pool for being eligible to PIL.
- Onboard BOLD into the lending protocol.(mainly for the next step)
- Create a BOLD<>USDC/BOLD<>USDC Smart Collateral/Smart Debt Vault permitting Liquidity Providing leveraging.
- Maybe opening the possibility of directing part of the future revenue cut of this pool to incentivize PIL voting toward this pool.
Conclusion
This proposal put forward the first step of Liquity onboarding into Fluid. Every proposed parameters of the pool are completely open to suggestions. sBOLD may also be a good asset to be onboarded on Fluid as collateral to borrow BOLD permitting to leverage the spread between the stability pool yield and Fluid borrowing rate. If this first step pass approval, next steps will have further explanations in following proposals.
