RFP-13: add wstETH (wrapped staked ETH) from Lido finance as a full collateral and borrow market

Abstract

RFP-13 looks to add wstETH (wrapped staked ETH) from Lido finance as a full collateral and borrow market to the Arbitrum deployment of Radiant Capital.

Motivation

Radiant Capital aims to provide a decentralized platform for lending and borrowing cryptocurrencies, offering users an efficient and secure means to access financing and generate yields. As the cryptocurrency market evolves, it is essential to expand the platform's offerings by incorporating new, high-quality assets as collateral and borrowing options.

The objective of this governance proposal is to seek approval for the integration of wstETH (Wrapped Staked Ether) as an accepted form of collateral and as a borrow market within the Arbitrum deployment of Radiant Capital.

stETH represents the largest market cap of Liquid Staked Derivatives, and the DAO thinks that it could attract significant additional liquidity and users to Radiant Capital.

wstETH has already been evaluated by the Risk Committee and parameters have been recommended, given the initial plan was to create the dLP pair with RDNT-wstETH. Suggested initial parameters will be laid out below.

Key Terms

• wstETH - Wrapped Staked ETH from Lido Finance (lido.fi).

• Max LTV - The Maximum LTV ratio represents the maximum borrowing power of a specific collateral. For example, if a collateral has an LTV of 75%, the user can borrow up to 0.75 worth of ETH in the principal currency for every 1 ETH worth of collateral.

• Liquidation Threshold: This represents the threshold at which a borrow position will be considered undercollateralized and subject to liquidation for each collateral. For example, if a collateral has a liquidation threshold of 80%, it means that the position will be liquidated when the debt value is worth 80% of the collateral value.

Specifications

• Add wstETH as a full collateral and borrow market

• Max LTV: 70% (at launch) → 75% (two weeks after launch)

• Liquidation Threshold: 80% (at launch) → 85% (two weeks after launch)

• Scale allocation points (incentive emissions) for lend and borrow markets as deposits grow for a two-week period, at which point AP will be stabilized

Steps to Implement

• Add wstETH as a collateral and borrow market with parameters as laid out above

Overall Cost/Impact

• Minimal

Timeline

• Immediate effect, pending local testing success

Voting

• In Favor: Supportive of RFP-13, adding wstETH to the Arbitrum deployment of Radiant

• Against: Against implementation of the RFP-13 proposal

• Abstain: Undecided, but contributing to quorum