AMKT-IP-8: Whitelist 21BNB, 21SOL, 21AVAX for inclusion in AMKT

Summary:

We propose adding new wrapped assets from 21.co in order to reduce reliance on Wormhole as a bridge.

AMKT currently utilizes Wormhole as a bridge for BNB, SOL, and AVAX tokens. This exposes users to risks associated with Wormhole.

21.co has built wrapped implementations of these assets. The structure mirrors assets commonly used in DeFi like BitGo’s Wrapped BTC (WBTC) and seeks to improve on cross-chain exposure.

Motivation:

We believe reducing the number of outstanding third party dependencies improves the overall security of AMKT.

While there’s a tradeoff on decentralization and a reliance on a third party custodian with the 21co assets, we believe reducing the total number of third party dependencies improves security and that the risks associated with 21co’s custody is lower than risks tied to Wormhole’s bridge.

Implementation:

We propose including the following assets for eligibility at the time of of the next reconstitution:

21BNB 21SOL 21AVAX

In order to be implemented in the AMKT index, the assets must follow the criteria outlined in the AMKT methodology, which includes criteria for minimum liquidity thresholds and secondary trading. Should these assets meet the criteria at the time of the AMKT reconstitution, they’ll be added to the index like any other top 15 asset.

Risk Factors:

The implementation features a reliance on 21.co, introducing a custodial trust assumption for the underlying assets.

Dependency on 21.co could adversely impact AMKT holders if the wrapped assets were found to be undercollateralized or otherwise rehypothecated.

If the 21.co wrapped asset contracts were to have a security vulnerability, AMKT holders could be adversely impacted.

If liquidity for 21.co tokens were to be insufficient, AMKT creations and redemptions could be adversely impacted.

Relevant Links: 21.co

Conclusion:

We recommend AMKT holders vote FOR our proposal to add the three new 21.co assets, limiting bridge risk for AMKT holders.