LP providers can now borrow against their autocompounded Netswap and Tethys LP positions.
Accepted LP Market Collateral
| Name |
Symbol |
Collateral |
Collateral Factor |
Liquidation Bonus |
Reserve Factor |
Can be Borrowed |
Agora Rewards |
| Stablecoins |
|
|
|
|
|
|
|
| Metis USDC |
m.USDC |
No |
0% |
NA |
20% |
Yes |
Yes |
| Metis USDT |
m.USDT |
No |
0% |
NA |
20% |
Yes |
Yes |
| USDO |
USDO |
No |
0% |
NA |
20% |
Yes |
Yes |
| Other Assets |
|
|
|
|
|
|
|
| Metis |
Metis |
No |
0% |
NA |
20% |
Yes |
Yes |
| Netswap LPs |
Misc |
Yes |
25% |
5% |
20% |
No |
No |
| Tethys LPs |
Misc |
Yes |
25% |
5% |
20% |
No |
No |
Autocompounded LPs
Most of the above major LPs on Metis have farms that incentivize LP providers. An autocompounding service will automatically harvest your rewards and redeploy them to the LP to deliver an autocompounding outcome. We will be working with OCP Finance’s “Steaks” platform for the autocompounding component. The user flow would be you supply LP, deposit the LP tokens on OCP to get receipt tokens (puff tokens) and then use these puff tokens as collateral on Agora + to borrow against them.
You can follow a handy walkthrough of the process here:
Collateral Factor
The collateral factor of these autocompounded LPs will be quite low to start at 25%. This will then steadily increase as the system withstands the test of time and more liquidity enters the market. They are not expected to exceed 65% at their maximum though.
Risks & Mitigation
- We will be establishing a new money market instance separate to the current one where these puff tokens can be used as collateral. They will not be used on the main instance that is currently live. This will separate the risk associated with them and allow depositors in this instance to make a conscious decision about the amount of risk they choose to take on.
- We are pricing the LPs in non manipulative manner, for further details the logic employed is here https://blog.alphafinance.io/fair-lp-token-pricing/
- The collateral factor of these autocompounded LPs will be quite low to start at 25%. This will then steadily increase as the system withstands the test of time and more liquidity enters the market. They are not expected to exceed 65% at their maximum though.
- The user typically receives 1 or less than 1 puff token per LP token staked. This is because the puff tokens continuously increase in value. This means that the price of a corresponding puff token would be > the LP token. However we are pricing the price of the puff token to be the same as the LP token at the contract level. This makes things more conservative while also reducing the risk associated with pricing the puff tokens separately.
- The puff tokens cannot be borrowed, they can only be used as collateral. This reduces significantly the risk of flash loan based attack vectors.
- On the other side, various stable coins and Metis can be used as assets that can be lent against the puff token collateral. These however cannot be used as collateral and can be only used to earn a staking APY + Agora rewards
- The puff token markets are not incentivized with Agora. You earn only for staking the puff tokens and borrowing stables or Metis. This creates borrowing demand for the stables and Metis. Supplying stables and Metis is incentivized with Agora.
We are allocating 10M Agora as incentives to this market to kick off liquidity.