[FIP - 404] Create new wBTC/sFRAX Fraxlend Pair

Governance Proposals Fraxlend
1

Authors:
Michael Henry

Summary:
Propose the creation of a new Fraxlend pair on the Ethereum Mainnet: wBTC/sFRAX

Details:

  • Fraxlend Pair Name 1: wBTC/sFRAX
  • Chain: Ethereum Mainnet
  • Curve: New sfrxETH/sFRAX Curve
  • Max Loan-to-Value (LTV): 75%

Background and Motivation:
My sfrxETH proposal laid out why I think we should offer a multitude of sFRAX lending pairs: [FIP - 403] Create new sfrxEth/sFRAX Fraxlend Pair

Liquidity Profile:
The Max LTV is identical to that of the wBTC pool which is one of the largest Fraxlend pools, so that shouldn’t be a concern.

Curve Details:
Identical curve to sfrxETH/sFRAX Fraxlend Pair

Voting:

  • For: Approve the creation of the wBTC/sFRAX Fraxlend pair on Ethereum Mainnet with the specified curve, and max LTV
  • Against: Do not approve the creation of the new Fraxlend pair.
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This proposal is up for voting here: Snapshot

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Can you provide any motivation as to how this will be materially different from the wbtc/Frax pair?

Any context would be greatly appreciated.

4

Lenders will receive higher APY’s when lending for the same borrow rate vs. the current pool. I used nearly identical curves to make the comparison simpler but obviously I’ve proposed making the curve more similar to the sfrxETH curve.

Example:
The current WBTC/FRAX pair currently has a utilization rate of 61.65%, a Lender APY of 10.33% and a Borrow APR of 15.49. There are $2.614m and $1.626m available to borrow. So, total lenders are making $437,785.4: (0.1033 * 4,238,000 )

If the WBTC/sFRAX pair had the same curve but shifted downward 6% (current sFRAX APY) and the same Borrow APR, lenders would be making: $535345.4 = (0.1033 * 4,238,000 ) + (0.06 * 1,626,000) which is roughly 12.63% APY.