Proposal to add sUSD as a capped collateral
Proposal to add sUSD as a [capped] collateral to Interest Protocol.
sUSD is a decentralized stable coin over collateralized by the SNX token. There is significant liquidity for sUSD on both Mainnet and Optimism. I am proposing for it to be enabled as collateral on Interest Protocol on Mainnet
The steady demand for decentralized stable coins has contributed to sUSD growth. sUSD is highly over collateralized by SNX, the governance token, and backstop for the Synthetix protocol.
The rise in its liquidity on major dexes has contributed to sUSD stability over the past year, and allowing collateral use would promote its liquidity in Interest Protocol markets.
Token Address: [0x57Ab1ec28D129707052df4dF418D58a2D46d5f51]
Liquidation threshold: 97.5%
Liquidation incentive: 5%
Maximum Cap: 10 million
Primary oracle: SUSD / ETH | Chainlink
Secondary oracle: sUSD / USD | Chainlink
Price deviation: 1%
Market Cap: ~50 million
Liquidity: sUSD has deep liquidity. sUSD/3crv curve pool - TVL [$71M/14.3M] sUSD
sETH curve pool- TVL [$18.8M / $8M sETH]
sBTC curve pool- TVL [$5.2M / 2.3M sBTC]
[Coingecko] 7-day avg 24hr volume: 7.05 Million
Notable exchanges: Uniswap, Sushi, Curve, Binance, Kucoin, Kwenta
SNX stakers are incentivized to actively manage their debt relative to their SNX stake and sometimes cause spikes in demand for sUSD on markets including AAVE (especially when there are other Yield generating opportunities with sUSD), this may cause small deviations from the peg but with low volatility.
From a counter-party risk perspective, all underlying functions in relation to sUSD are fundamentally the same as that of SNX.
The SNX and sUSD contracts are fully upgradeable. Still, all changes must go through a formal governance process from SIP to deployment, which would be announced well before the upgrades are made and thus does not present a substantial counter-party risk.
The sUSDv2CRV pool has deep liquidity on L1.
In addition to sUSD, there are other synth pools on Curve with emission gauges to supplement sUSD liquidity (sBTC, sETH ). All synths are redeemable at their dollar value in sUSD at the ChainLink quoted price through the Synthetix protocol or Curve (via cross-asset swaps); thus they help facilitate the arbitrage sUSD peg deviations.
sUSD is already listed on Aave, Euler, Compound, Silo Finance, Sonne, Granary, and a few others.