Zunami DAO Vote Id:8 - Add XAIFRAXBP Strategy.

Zunami Team is excited to announce that voting is now open for the addition of Convex - XAIFRAXBP as as a new protocol strategy. A proposal has been submitted to the DAO for review and approval to add the strategy and transfer funds.

For a deeper analysis, we recommend reading the @cryptorisksteam report: https://cryptorisks.substack.com/p/asset-risk-assessment-silo-finance

Protocol Description: Silo Finance is a decentralized, non-custodial lending protocol that allows users to borrow any asset using any other asset as collateral. It works by creating isolated (siloed) lending markets. ETH and XAI function as bridge assets to connect individual silos. The protocol is permissionless and uses a CDP (Collateralized Debt Position) system similar to MakerDAO's, where XAI can only be minted by the DAO and users can deposit collateral to borrow XAI at an interest rate of 0.1%. This helps to control risk exposure to certain collateral types.

Stablecoin Description: XAI is a decentralized stablecoin with a soft peg to the US Dollar. As a CDP in the Silo lending protocol, users can deposit collateral to borrow XAI. The DAO controls the minting of XAI and sets the initial interest rate at 0.1%. Similar to MakerDAO, XAI's risk exposure is controlled by limiting the amount of stablecoins that can be minted per collateral vault.

Smart contract risk The core smart contracts were fully audited by Quantstamp and ABDK and tested by the core team through a formal verification process using Certora Prover.

Custody risk SiloDAO is a decentralized autonomous organization that operates via on-chain governance votes, ensuring that protocol decisions align with the best interests of the DAO and its investors. Plus, the owner of the core contracts doesn't have access to user funds, minimizing the risk of custody issues.

Default risk XAI is a new stablecoin with no historic data on its stability. However, Silo has implemented measures to ensure XAI's stability, including over-collateralization with USDC and ETH, deep liquidity, parameter adjustments, and potential fallback solutions. XAI's stability is also dependent on the quality of its collateral and its ability to absorb liquidations and arbitrage. As XAI's usage expands, it may be backed by more volatile assets and require a concrete fallback plan.

Collateral Risk XAI is initially backed by USDC and ETH to minimize risks such as low liquidity and high price volatility. While new credit lines can be proposed and approved by governance, care should be taken to avoid supporting illiquid and highly volatile assets. RiskDAO's bad debt dashboard and more detailed risk assessments can help inform users about the health of individual silos."

Risk of stop incentivization Silo Finance, with its 250k CVX treasury, uses it for voting and pool is also incentivized by FRAX. No risks of low yields in the near future are expected."

Pool Description: https://curve.fi/#/ethereum/pools/factory-v2-223/deposit The pool is balanced with TVL around 3.8M and APY over 10% when staking LP in Frax Booster.

Strategy features:

• Deposit of stablecoins (USDT, USDC, DAI) in the XAIFRAXBP pool on Curve USDT and DAI are automatically exchanged for USDC
• Lock XAIFRAXBP3CRV-f LP tokens for 7 days in Frax booster on Convex
• Relocked it 1 time a week
• Automatic sale and reinvestment of CRV, CVX and FXS rewards.

Actions:

• Add «Convex - XAIFRAXBP Pool" strategy as one of the Zunami Protocol strategies.
• Rebalance part of the funds from the "StakeDAO- MIM pool" to "Convex - XAIFRAXBP Pool".
• Zunami funds in a pool cannot exceed 10% of all funds in the pool.