Author
Samuel
Summery
The proposal aims to incorporate a new market into Fraxlend on Ethereum mainnet with following specifications:
| Asset | Collateral | Rate Type | Chain | Max LTV | Fraxlend Pair Address |
|---|---|---|---|---|---|
| stETH | sfrxETH | Variable Rate V2 | Ethereum | TBD | TBD |
Background and Motivation
With the addition of the recently approved steth Curve AMO, I wanted to start a discussion on adding a new market to Fraxlend.
Sfrxeth/steth
This pair would let people wrap and get leverage on their lsd positions. The supply asset is sfrxeth and the borrowed asset is steth, which has a lower average APR. With a high LTV of 90%, we could enable 10x leverage on the interest rate differential. High LTVs would bring higher leverage, but I think it would be wise to see how the pair preforms during liquidations.
On the LTV, since these are interest rate differential products, I could see the LTV going up to 98% once the market develops enough. 10x is a good start, but high leverage is needed for good rate products.
Its beneficial for both parties and also for generating more revenue for the protocol. With the new AMO providing liquidity into the steth/frxeth lp there should be enough liquidity to handle liquidations.
I want to start this thread to start researching what demand might look like for this pair and also get feedback on lending parameters.
We also could add a sfrxETH/reth pair, which would be more profitable because the rETH yields are always the lowest. However, there is no rETH AMO and so liquidity issues could arise during liquidations.
Options
- For: Deploy sfrxETH/stETH lending pair on Fraxlend in Ethereum mainnet
- Against: Do nothing