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Enable A New Vault Type With USDC As Collateral
5mos ago
2 Comments

Summary

A new type of vault can be activated using USDC via Moonriver (xcUSDC) as collateral. More details below.

Proposal

Currently only KSM is accepted as collateral for vaults. One of the main goals for kBTC stability is to diversify the number of tokens that can be used as collateral. This has also been requested by current kBTC vault operators.

The next asset after KINT suggested as collateral is a USD stablecoin - more specifically USDC. It is the stablecoin that we can enable the fastest which also has considerable liquidity on Moonriver (around $4.5 million) and has been requested by the currently active vaults.

USDC can be imported from Moonriver via XCM - which in turn imports USDC from Ethereum via the Multichain bridge (formerly AnySwap). Note: once a native (i.e., directly minted on Kusama) USDC deployment is available, it would be best to switch to that.

Please find below the parameter configuration proposed for the “USDC vaults”:

  • Initial collateral ceiling: 1 million USD equivalent
  • Secure collateral threshold: 160%
  • Premium redeem threshold: 140%
  • Liquidation threshold: 120%

For context, we run modelling and simulations for every new collateral type as well as many other references and points of comparison before we conclude on the collateral rates.

The next step is hence to activate this vault type with the above parameters via an on-chain governance proposal.
NOTE: In light of the current situation, we would like to unblock vaults and users as fast as possible so that new kBTC can be issued. Hence we also would like to fast track the on-chain proposal if the community is not strongly against the vault type.

Fellow Kintsugi innovators - as always, we appreciate your time reviewing this proposal and welcome comments and feedback.
Please be aware that this is only a discussion post and a formal on-chain proposal will follow.

We have also set up an optional off-chain poll here: https://voting.opensquare.io/space/kintsugi/proposal/QmWYCMNbeMrdujZZx19qN8t6re2NSDkeSE1JjUoAA4EZWB

Resources

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5mos ago

I am all in favour of accepting stablecoin at collateral for minting kBTC, however I would much prefer a Kusama native coin: USDT or aUSD.

xcUSDC is a bridged token, and this would introduce a lot of dependency into kintsugi.

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5mos ago

@timbotronic excellent point. Maybe to add: having USDC does not exclude any of the other stablecoins to be added in the future.

For aUSD there is a need to model it a bit better since there is a circular dependency due to plans of adding kBTC as collateral for aUSD first.

USDT doesn't really have a lot of liquidity yet.

At the current stage, xcUSDC seems to be the easiest to add option.

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