Summary

This proposal aims to enable lisUSD borrowing against PancakeSwap LP positions (V2, V3, Infinity, and StableSwap) as collateral in Lista DAO’s Collateral Debt Position Innovation Zone. The valuation of LP tokens will rely on a dedicated LP Oracle and LP Manager system with embedded circuit breakers to control volatility risk. Liquidation mechanisms will support LP redemption before the Dutch auction, ensuring smooth liquidation processes. Additionally, 50% of borrow interest and liquidation fees will be shared with PancakeSwap to foster partnership and ecosystem growth.

This proposal explores synergies leveraging both protocol’s latest infrastructure, which will significantly help both of the protocols bringing new ecosystem expansion, user adoption, and revenue opportunities.

About lisUSD

lisUSD is a decentralized, unbiased, collateral backed stablecoin soft-pegged to the US Dollar. Users who deposit assets as collateral within the Lista CDP module are eligible to borrow lisUSD based on the value of their collateral. lisUSD is generated, backed, and kept stable through collateral assets that are deposited into CeVault functioning as the Lista collateral vault.

lisUSD Key Technical Aspects

● Peg Stability Module (PSM): The Peg Stability Module (PSM) is a critical component designed to maintain the stability and usability of lisUSD by facilitating seamless conversions between centralized stablecoins (eg USDT or USD1) and lisUSD. ● Algorithmic Market Operations (AMO): A dynamic borrow rate mechanism of lisUSD, similar to Curve Finance’s MonetaryPolicy contracts for crvUSD, to further strengthen price stability of lisUSD. ● D3M (Direct Deposit Module): A mechanism that enables the direct minting of stablecoins — in this case, lisUSD — and deposits them into DeFi platforms to bolster liquidity and optimize market rates.

Motivation

The goal of this proposal is to increase the synergies between PancakeSwap and Lista DAO by allowing leveraged LP positions, further enhancing capital efficiency and resiliency of the DeFi ecosystem as a whole, and create new revenue opportunities for both protocols.

PancakeSwap has become a leading AMM on the BNB Chain, with substantial liquidity locked in various LP tokens. Lista DAO is growing to be one of the largest DeFi protocols on BNB Chain as well by TVL and provides the safest venue to lend and borrow stablecoins and other assets. By enabling Pancake LP tokens as collateral on Lista DAO to mint lisUSD, this proposal unlocks additional borrowing power for users, diversifies collateral options, and promotes better utilization of liquidity.

Precise valuation mechanisms combined with circuit breakers will maintain protocol safety and reduce risk exposure.

Furthermore, the revenue sharing agreement with PancakeSwap aligns incentives, fostering deeper partnership and ecosystem growth, benefitting both protocols and their users.

Supported Collaterals

This integration will support the following LP tokens:

Collateral Valuation

Value Abstraction

● Upon depositing LP tokens into the CDP, the LP Manager mints a corresponding amount of lpUSD tokens representing the collateral value within the system. ● The amount of lpUSD minted is dynamically adjusted based on LP token value changes, using the LP Oracle’s valuation data. ● Each NFT position (for V3 LPs) is calculated independently.

LP Oracle Calculation Methods

Minting and Liquidation Process

Minting Flow

● Users deposit PancakeSwap LP tokens to the CDP within the Innovation Zone. ● LP Manager mints lpUSD tokens proportional to the collateral value given by LP Oracle ● Users borrow lisUSD against these lpUSD tokens.

Liquidation Flow

● Supports LP redemption before Dutch auction liquidation, maximizing recovery value. ● When collateral value falls below the LTV threshold, liquidation triggers either partial or full redemption and/or auction. ● Circuit breakers will halt new borrowing if major tokens (BTC/ETH/BNB) fall more than 5% within 10 minutes.

Risk management

To manage LP token volatility and complexity: ● Apply conservative safety factors (0.90 for V2, 0.85 for V3). ● Set borrowing caps per LP type to control exposure. ● Circuit breaker triggers to pause borrowing during extreme price drops (>5% in 10 min for BTC/ETH/BNB). ● Continuous monitoring of LP pool liquidity and volatility indicators.

Profit Sharing

● 50% of all borrow interest and liquidation fees generated from lisUSD borrowed against PancakeSwap LP tokens will be shared with PancakeSwap. ● Revenue sharing incentivizes cooperation and benefits both ecosystems. ● On-chain automation will ensure transparent and timely distribution to each protocol’s treasury.

Phase 1 Implementation Plan

Initial launch targeting at supporting popular PancakeSwap LP tokens with the highest TVL, and gradually expanding the scope.

Benefits (Pros)

● Increased Capital Efficiency Allowing PancakeSwap LP tokens as collateral enhances liquidity utilization and unlocks additional borrowing power. ● Broader Collateral Options Expands the range of assets users can pledge, making the borrowing process more flexible and attractive. ● Ecosystem Growth Fosters deeper partnerships across DeFi by integrating PancakeSwap LP tokens, benefiting both protocols through shared liquidity and user exposure.

Voting

Yes: Approves the integration of PancakeSwap LP tokens as a collateral in Lista DAO’s Collateral Debt Position Innovation Zone, based on the proposed details.

No: Rejects this proposal, preventing PancakeSwap LP tokens from being introduced to the Lista DAO Collateral Debt Position Innovation Zone.