The purpose of this thread is to start discussing which collaterals should be onboarded as part of the starting MOR protocol.
Important considerations for onboarding collaterals
- Smart Contract Risk
- On-chain Liquidity/Debt Ceiling ratios
When proposing initial parameters (min collateralization ratio, stability fee, liquidation penalty…) the smart contract risk should be priced in.
To minimize as much as possible failed liquidations there should be healthy on-chain liquidity when compared to the debt ceiling.
Parameters for collaterals
Debt CeilingThe "Debt Ceiling" is the maximum amount of MOR that can be minted using a collateral type.
Stability FeeBorrow APY being paid by users on their outstanding MOR debt (higher collateral risk -> higher stability fee). In order to be competitive it is recommended that stability fees are at least slightly lower than the rates offered by money market protocols (Venus, Cream, Alpha Finance & Alpaca Finance).
Minimum Collateralization RatioThis is the minimum required collateralization ratio that a user needs to have in order to avoid liquidations (if the collateralization ratio is 150% then they need to have at all times at least 150$ worth of collateral for every 100 MOR in outstanding debt). If the minimum collateralization ratio is very low the user can be very capital efficient and use high leverage to maximize profits but it shouldn't be too low since that can lead to a higher default risk and failed liquidations. When proposing a minimum collateralization ratio for a collateral its volatility and liquidity should be taken into account.
Liquidation PenaltyLiquidation penalties are additional fees charged by the protocol and serve as buffer to cover losses in the event of failed liquidations (the difference between penalties and failed liquidation losses would be extra revenue from liquidations). If a collateral is high risk it should have a high liquidation penalty so that succesful liquidations create a buffer/reserve in case a black swan event happens.
OraclesMOR uses two main oracle types:
Chainlink OraclesYou can find the available pairs supported by Chainlink on BSC here.
Long TWAP OraclesFor those pairs that don't have support from Chainlink oracles we would use long TWAP oracles (Time Weighted Average Prices), in order to avoid price exploits TWAP prices have slight price delays and that should be taken into account for the above parameters too.
Competition RatesThis are the main protocols on BSC that offer borrowing, their rates and LTV ratios should be taken into account when considering a competitive stability fee.
Potential Yielding Collaterals to discuss about
- stkTokens using ApeSwap LP tokens and stkBANANA.
- stkTokens using PancakeSwap LP tokens and stkCAKE.
- stkTokens using Wault Finance LP tokens, stkWEX and stkWAULTx.
- stkTokens using MDEX LP tokens and stkMDX.
- stkTokens using Venus vTokens.
- stkTokens using Alpaca ibTokens and stkALPACA.
- Alpha Finance ibBNB.
- stkAUTO using AutoFarm.
- stkWHEAT using WHEAT.
Potential Non-Yielding Collaterals to discuss about
Now it’s time to start discussing and planning for the MOR launch!