LIP-005: Inclusion of USDT as a Collateral Option for Borrowing lisUSD (COLLATERAL-EXPANSION)

Summary:
This proposal seeks to include USDT as a new collateral option for borrowing lisUSD on Lista DAO, expanding the range of assets that can be used and enhancing the platform’s flexibility and appeal.

References:

• USDT Website: Tether
• Whitepaper: Tether Whitepaper
• Documentation: Tether Legal
• Ethereum Contract Address: USDT on Etherscan
• Oracle Data Sources: Binance Oracle USDT-USD
• Smart Contract Audits: Tether Audits

Abstract:
We propose integrating USDT as a collateral option for borrowing lisUSD on the Lista DAO platform. USDT (Tether) is a stablecoin designed to maintain a 1:1 peg to the U.S. dollar, backed by a combination of cash, cash equivalents, and other assets. With a market cap exceeding $83 billion, USDT is the most widely used stablecoin in the cryptocurrency market. As a trusted and audited stablecoin, USDT offers a high level of stability and security, making it an ideal candidate for collateral in decentralized finance (DeFi) protocols.

Adding USDT as a collateral option will allow users holding USDT to leverage their assets for borrowing lisUSD, increasing the utility of USDT within the DeFi ecosystem. This integration will also enhance liquidity on the Lista DAO platform, attracting a broader range of users and strengthening Lista DAO’s position as a leading DeFi protocol.

Motivation:

• Current Problem: Lista DAO currently offers a limited range of stablecoin assets for collateral, restricting user flexibility and potentially hampering growth.
• Proposed Solution: By including USDT, the largest stablecoin by market capitalization, as a collateral option, we can attract a broader user base and increase borrowing activity on the platform.

Value-Add:

• User Growth: Introducing USDT as a collateral option is expected to attract new users holding USDT, thereby increasing the platform’s user base and liquidity.
• Stability and Trust: USDT is backed by cash and other assets, providing a stable and secure asset for collateral. This stability is crucial for maintaining the integrity of borrowing and lending on Lista DAO.
• Growing Adoption: USDT has significant traction in the crypto market, with high trading volumes and widespread integration, making it a valuable addition to the Lista DAO ecosystem.
• Market Demand: There is a rising demand for stablecoin collateral options in DeFi. Integrating USDT meets this demand, offering a trusted and stable asset for loans.
• Alignment with Trends: Stablecoins like USDT bridge the gap between traditional finance and crypto. Adding USDT as collateral aligns Lista DAO with market trends and ensures competitiveness.
• Platform Flexibility: Including USDT as a collateral option increases flexibility, allowing users to choose from a wider range of assets, mitigating risks and attracting a broader user base.

Specification:

• Minimum Collateralization Ratio: 110%
• Loan Limit: 5M lisUSD
• Mint Fee: 0
• Loan Interest Rate: 4%
• Withdrawal Options: USDT
• Withdrawal Fee: 0
• Minimum Borrow Amount: 15 lisUSD
• Minimum Deposit Amount: 100 USDT

Benefits:

• Increased Platform Utilization: More collateral options will attract users and increase borrowing volumes, contributing to platform growth and liquidity.
• Broader User Base: Attracting users holding USDT will expand the Lista DAO community and increase engagement.
• Enhanced User Experience: More collateral options improve flexibility and make the platform more attractive.

Downside:

• Market Risk: The addition of USDT introduces new market risks, requiring careful monitoring and management.
• Implementation Complexity: Integrating USDT as collateral may involve complex adjustments to smart contracts and risk management protocols.

Voting Options:

• Yes: Approve the inclusion of USDT as a collateral option for borrowing lisUSD, with necessary updates to smart contracts and risk management protocols.
• No: Reject the proposal and maintain the current collateral options without including USDT.