Summary
This proposal seeks community support to deploy Fluid to Polygon PoS and outlines initial lending tokens, vaults, limits, rewards, and all the initial setups.
Proposal
The Instadapp team proposes the deployment of Fluid on Polygon PoS to continue our multichain expansion.
The configs as suggested by the team on the Lending Protocol, Vault Protocol & Liquidity Layer are added below.
Lending Protocol
Listing of USDC, USDT, POL & ETH on the Lending protocol. Withdrawal Limits are explained below in the Liquidity Layer section.
Set team multisig as deployer and allow to make changes to the interest rate curves for the initial bootstrapping period to speed up the growth of Fluid on Polygon PoS. The deployer has access to deploy new fTokens from the factory contract. There will be a follow-up proposal to transfer ownership to the Governance after the markets are stabilized and cross-chain governance is deployed.
Vault Protocol
Fluid’s vault protocol features some familiar and as well as some new concepts for understanding the vault’s limits and parameters. See the following below:
C.F (Collateral Factor): Limit till which user can borrow.
L.T (Liquidation Threshold): Limit at which the user starts to get liquidated.
L.M.L (Liquidation Max Limit): Limit above which user gets 100% liquidated.
L.P (Liquidation Penalty): Penalty at liquidations. Applied between L.T to L.M.L.
W.G (Withdrawal Gap): Extra gap on Liquidity Layer limits reserved for liquidations.
Liquidation Max Limit or L.M.L, which denotes a level at which a position is fully liquidated. While most positions will incur liquidations over time, the Liquidation Max Limit prevents the debt from becoming undercollateralized in a sudden downfall.
The following vaults are proposed for launch. Once these markets are live, the team will continue to propose additional vaults and assets, including Polygon native assets.
1) ETH Collateral & USDC debt:
- Collateral Factor: 80%
- Liquidation Threshold: 83%
- Max Liquidation Limit: 88%
- Liquidation Penalty: 4%
Limits:
- Base withdrawal limit: $6.5 Million
- Base borrow limit: $6.5 Million
- Max borrow limit: $19.0 Million
2) ETH Collateral & USDT debt:
- Collateral Factor: 80%
- Liquidation Threshold: 83%
- Max Liquidation Limit: 88%
- Liquidation Penalty: 5%
Limits:
- Base withdrawal limit: $6.5 Million
- Base borrow limit: $6.8 Million
- Max borrow limit: $19 Million
3) ETH Collateral & POL debt:
- Collateral Factor: 75%
- Liquidation Threshold: 80%
- Max Liquidation Limit: 83%
- Liquidation Penalty: 8%
Limit
- Base withdrawal limit: $6.5 Million
- Base borrow limit: $7.0 Million
- Max borrow limit: $18.0 Million
4) POL Collateral & USDC debt:
- Collateral Factor: 68%
- Liquidation Threshold: 73%
- Max Liquidation Limit: 80%
- Liquidation Penalty: 10%
Limits:
- Base withdrawal limit: $7.0 Million
- Base borrow limit: $6.5 Million
- Max borrow limit: $19.0 Million
5) POL Collateral & USDT debt:
- Collateral Factor: 68%
- Liquidation Threshold: 73%
- Max Liquidation Limit: 80%
- Liquidation Penalty: 10%
Limits:
- Base withdrawal limit: $7.0 Million
- Base borrow limit: $6.8 Million
- Max borrow limit: $19.0 Million
6) wBTC Collateral & ETH debt:
- Collateral Factor: 80%
- Liquidation Threshold: 83%
- Max Liquidation Limit: 86%
- Liquidation Penalty: 5%
Limits:
- Base withdrawal limit: $6.5 Million
- Base borrow limit: $6.5 Million
- Max borrow limit: $18.0 Million
7) ETH Collateral & wBTC debt:
- Collateral Factor: 80%
- Liquidation Threshold: 83%
- Max Liquidation Limit: 86%
- Liquidation Penalty: 5%
Limits:
- Base withdrawal limit: $6.5 Million
- Base borrow limit: $6.5 Million
- Max borrow limit: $18.0 Million
8) wBTC Collateral & USDC debt:
- Collateral Factor: 75%
- Liquidation Threshold: 78%
- Max Liquidation Limit: 81%
- Liquidation Penalty: 6%
Limits
- Base withdrawal limit: $6.0 Million
- Base borrow limit: $6.5 Million
- Max borrow limit: $18.0 Million
9) wBTC Collateral & USDT debt:
- Collateral Factor: 75%
- Liquidation Threshold: 78%
- Max Liquidation Limit: 81%
- Liquidation Penalty: 6%
Limits
- Base withdrawal limit: $6.0 Million
- Base borrow limit: $6.8 Million
- Max borrow limit: $18.0 Million
Initial Limits may change over time
The team will monitor the liquidations and suggest increasing the limits and decreasing the liquidation penalty accordingly. More markets, including POL LSTs, will be added to Fluid shortly after the launch.
DEX Protocol
Fluid DEX will be deployed on Polygon after the initial liquidity on the lending market is bootstrapped.
Incentive Campaign and Liquidity commitment
To bootstrap initial liquidity, Polygon will provide:
- 1.5M $POL as incentives for the lenders
- $10m of stablecoin liquidity
- ~$25m of POL/LST liquidity
Fluid will match the incentives with $1.5M $FLUID rewards after the following conditions are met:
- 60m USD worth in borrowed stablecoins on the Fluid market
- Average $2.5B weekly volume across all DEXes combined on Polygon for at least 2 consecutive weeks
Rewards Setup:
The Fluid team will manage the incentives distribution to attract lenders with the high lending APRs and attract borrowers with the low borrowing APRs.
Motivation:
Polygon chain has a significant organic demand for the Lending and Borrowing markets - more than 60% of Polygon’s TVL is composed of the lending markets and almost 100% TVL is composed of lending markets ard DEXes.
Polygon is also quickly expanding its RWA infrastructure and remains one of the leaders in the payments processing. Polygon has a vision to bring FOREX on-chain and Fluid and especially Fluid DEX can become the centerpiece in Polygon’s plans.
Conclusion
This proposal will enable the function and use of the Fluid protocol on Polygon PoS. This proposal sets the initial assets, vaults and market parameters for the protocol. This proposal also includes an early liquidity incentives to the USDC and USDT lending markets. Considering the request from the Polygon team to launch Fluid in the shortest terms, this proposal will be immediately escalated to the snapshot voting with a 48h voting period.
