What you are voting for?

• Extending 500,000 XAI of Credit to the USDT silo

USDT Credit Line

Basics

Name: Tether

Ticker: $USDT

Contract Address: 0xdac17f958d2ee523a2206206994597c13d831ec7

Description: $USDT is a fiat-collateralized stablecoin and the second largest stablecoin by circulating supply.

Absolute Parameters

Oracle: Chainlink USDT/ETH price feed

Liquidation: Silo’s liquidation engine can liquidate USDT collateral efficiently.

Protocol-Wide Parameters

As discussed in the original Risk Framework, no individual silo will receive a credit line extension exceeding 2,348,150 $XAI (1,643,705 $XAI after application of liquidity buffer).

Silo-Specific Parameters

$USDT has extremely high on-chain liquidity across multiple exchanges and is a constituent of Curve’s 3CRV base token.

Simulating sales on Matchaswap indicate that swaps of even 10,000,000 $USDT for $ETH would only incur slippage of 0.36%.

As such, the binding constraint for a credit line to $USDT is our Protocol-wide Parameters (i.e. $XAI on-chain liquidity) rather than $USDT itself.

Recommendation

$USDT is the second largest stablecoin by circulating supply after $USDC and is heavily utilized for yield farming protocols such as Yearn Finance. The $USDT silo currently does not have a credit line deployed.

Given that on-chain liquidity of $USDT is extremely high and as a battle-tested stablecoin with a low risk of de-peg, we recommend the deployment of a 500k $XAI credit line. The core team is currently in discussion with Yearn Finance contributors who aim to use the USDT silo to deploy yield strategies so we expect borrowing activity will be relatively high. Given the extent of $USDT on-chain liquidity, we recommend reassessing utilization and adjust upwards to our Protocol-Wide Limit as demand requires.

We recommend continued assessment of on-chain liquidity of both $USDT and $XAI to ensure that it remains within a safe range that will allow liquidations to occur as normal.