[EXAIP-04] Enabling WBTC as collateral

Proposal ID: EXAIP-04 Proposer: Exactly Core Team
Date: November 13, 2023

Summary

The proposal will incorporate the WBTC (Wrapped Bitcoin) market into Exactly Protocol on Optimism (OP Mainnet).

Background

As the Exactly protocol evolves, incorporating new markets will enhance its versatility and attract a wider user base. This proposal introduces the WBTC market into Exactly Protocol on OP Mainnet.

WBTC is an ERC-20 token on the Ethereum blockchain that is pegged to Bitcoin (BTC). WBTC is backed one-to-one with Bitcoin, and it can be minted or redeemed for BTC by anyone and without intermediaries. WBTC on Optimism is backed 1:1 by WBTC locked on Ethereum in the Optimism bridge protocol.

WBTC offers numerous advantages to users within the Optimism ecosystem. It enhances Bitcoin's liquidity by making it usable in various DeFi applications and protocols. This allows Bitcoin holders to engage in yield farming, leverage trading, and other activities previously reserved for Ethereum-based assets.

The liquidity of WBTC on OP Mainnet has been steadily increasing, bringing a new level of versatility to the ecosystem. This growing liquidity enhances the overall ecosystem and attracts a broader user base, fostering a dynamic and thriving DeFi community on OP.

Proposal

• The proposal aims to integrate a WBTC market into the Exactly Protocol on the OP mainnet. This integration will involve the following essential components and objectives:

  • Establishing a secure and efficient mechanism for users to deposit WBTC as collateral within the Exactly protocol.
  • Implementing smart contract interactions and protocols to enable the utilization of WBTC as collateral for borrowing and lending purposes.
  • Providing clear and comprehensive documentation to guide users in utilizing WBTC within the Exactly protocol.

Benefits

• The incorporation of WBTC into the Exactly protocol offers several advantages and positive outcomes, including:
  • Potential for increased trading volumes and activity within the Exactly protocol.
  • Diversifying collateral options gives users more options to secure loans and borrow assets.
  • Attraction of a broader user base, including Bitcoin enthusiasts seeking DeFi opportunities.
  • Enhanced WBTC's utility makes it a more versatile asset within the Optimism ecosystem.

Implementation

• The steps for implementation include:
  • Integration of WBTC market into the Exactly Protocol user interface.
  • Deployment on the OP Mainnet with comprehensive documentation and user guides.
  • Ongoing monitoring and support to address any issues or concerns arising during and after implementation.

We propose the following initial parameters for the WBTC:

Parameter	Value
Risk factor	0.78
Variable Rate:
A_vr	2.7194e-02
B_vr	3.0160e-03
Umax_vr	1.007776377
Fixed Rate:
A_fr	4.6586e-01
B_fr	-4.1345e-01
Umax_fr	1.050553997

The wallet address of the WBTC is the following: https://optimistic.etherscan.io/address/0x68f180fcce6836688e9084f035309e29bf0a2095

The implementation process will prioritize security, user experience, and the seamless integration of WBTC markets into the Exactly protocol, ultimately benefiting the Optimism ecosystem and its participants.

Conclusion

In summary, integrating the WBTC market into the Exactly Protocol on OP Mainnet represents a significant opportunity to enhance the protocol's functionality and attract a wider user base. This proposal outlines the rationale, benefits, and implementation steps for incorporating WBTC as collateral within the Exactly protocol. We believe this strategic move aligns with the evolving needs of the DeFi community and positions Exactly Protocol for continued growth.