LIP-008: Proposal to List SolvBTC.BBN as Collateral in the Innovation Zone

Summary:

This proposal seeks to list Solv’s SolvBTC.BBN as a collateral asset in Lista DAO’s Innovation Zone, enabling users to deposit SolvBTC.BBN and borrowing lisUSDthe minting of lisUSD.

References:

1. Website: https://solv.finance/
2. Documentation: https://docs.solv.finance/solv-documentation
3. Twitter: https://twitter.com/SolvProtocol
4. GitHub: https://github.com/solv-finance
5. SolvBTC.BBN Address: https://bscscan.com/token/0x1346b618dc92810ec74163e4c27004c921d446a5
6. Oracle: https://bscscan.com/address/0x24c8964338Deb5204B096039147B8e8C3AEa42Cc#readProxyContract
7. Communities: https://discord.com/invite/UF26MVSgbZ
8. Audits: https://github.com/solv-finance/Audit

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Abstract:

Solv Protocol is a leading Bitcoin staking platform that leverages SolvBTC to unlock the potential of over $1 trillion in Bitcoin assets. Through a transparent Proof-of-Reserve model, incorporating diverse reserve assets, and enabling access to Bitcoin Liquid Staking Tokens, Solv offers a comprehensive gateway to BTCFi, paving the way for traditional funds to confidently enter the crypto world.

SolvBTC.BBN is a liquid staking token (LST) for Bitcoin, representing the staked Bitcoin in Babylon. SolvBTC.BBN allows Bitcoin holders to earn staking yields, in exchange for sharing $1.3 trillion economic security of Bitcoin with PoS chains, while enabling them the flexibility to participate in DeFi.

SolvBTC.BBN has gained significant traction as a collateral asset in DeFi. As of Oct, 29th 2024the time of writing, approximately $151 million worth of SolvBTC.BBN has been natively minted on the BNB chain, with $64 million supplied as collateral in various lending markets. SolvBTC/SolvBTC.BBN liquidity pools are available on DODO and PancakeSwap, with $3 million in liquidity currently on DODO.

We propose adding SolvBTC.BBN as a collateral asset onin the Lista DAO’s Innovation Zone. This will allow users to leverage their staked assets as collateral for borrowing lisUSD, all while continuing to earn Bitcoin staking rewards.

This integration is expected to unlock greater liquidity, enhance capital efficiency, generate new yield opportunities, and drive growth for Lista DAO.

The integration and execution of this proposal will be managed by Lista DAO’s core contributors, following the risk parameters defined below.

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Specifications:

• Borrow Limit: $1 million lisUSD
• Minimum Collateral Ratio (MCR): 200%
• Borrow Interest Rate: 7.5%

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Motivation:

Listing SolvBTC.BBN as collateral in the Innovation Zone will provide users with an efficient and flexible collateral option for minting lisUSD. As a liquid staking token, SolvBTC.BBN allows users to continue earning rewards while leveraging their staked assets for further DeFi participation.

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Pros / Benefits:

1. Increased Liquidity: Listing SolvBTC.BBN will attract liquidity from Bitcoin stakers, thereby increasing the protocol’s asset pool and enhancing the stability and availability of lisUSD.
2. Greater Capital Efficiency: Users can leverage their SolvBTC.BBN to borrow lisUSD without sacrificing their Bitcoin staking rewards, leading to more efficient asset utilization and fostering a more attractive DeFi ecosystem.
3. Risk Mitigation: Liquid staking tokens like SolvBTC.BBN are typically less volatile, offering a more stable collateral option and contributing to a more secure lending environment for users.
4. Potential for User Growth: Listing SolvBTC.BBN could expand the Lista Protocol’s user base due to its popularity.

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Cons / Downsides:

1. Smart Contract Risks: SolvBTC.BBN, like any token, is subject to smart contract risks. However, these risks are mitigated by thorough audits and verification reports.
2. Market Risks: While SolvBTC.BBN has shown stability, volatility in market conditions or the unwinding of positions could impact its price. Historically, SolvBTC.BBN has traded within 100 basis points of SolvBTC’s price, providing a level of price stability.

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Voting:

• Yes: Approving this proposal will list SolvBTC.BBN as a collateral option in the Innovation Zone on ListaDAO.
• **No:**Rejecting this proposal will keep SolvBTC.BBN off the collateral list in the Innovation Zone on ListaDAO.