Moonwell

Summary

This proposal seeks to onboard USDS, the stablecoin of Sky Protocol, as a new collateral asset on Moonwell’s Base deployment. USDS is a decentralized and overcollateralized stablecoin designed to maintain a soft peg to the U.S. dollar. With seamless 1:1 conversions to DAI and integration into the Sky Protocol ecosystem, USDS provides users with a robust, stable, and permissionless asset for lending, borrowing, and liquidity provisioning. Adding USDS to Moonwell will enhance stablecoin liquidity, attract new users from the Sky Protocol community, and create synergies with Ethereum’s broader DeFi ecosystem. The stablecoin’s strong foundation, including decentralized governance and backing by surplus collateral, ensures reliability and security for all users. This proposal aligns with Moonwell’s mission to deliver simple, secure, and accessible onchain financial tools. For additional details, please review the USDS token documentation and USDS asset listing forum post.

Token Information

• Name: USDS
• Token Standard: ERC20
• Total Supply: ∞ (uncapped)
• Circulating Supply (Base): 100,338,559.43
• Token Contract: 0x820C137fa70C8691f0e44Dc420a5e53c168921Dc
• Price Feed: Chainlink USDS/USD

Benefits to the Moonwell Community

1. Enhanced Stablecoin Liquidity: Expands Moonwell’s stablecoin offerings, fostering new lending and borrowing opportunities.
2. Increased Protocol Engagement: Attracts users from the Sky Protocol ecosystem, including those leveraging the Sky Savings Rate for decentralized rewards.
3. Decentralization Alignment: Provides a permissionless, non-custodial stablecoin option aligned with DeFi principles.
4. Reduced Systemic Risk: Backed by surplus collateral and supporting 1:1 conversions with DAI, USDS offers a reliable, decentralized stablecoin solution.

Gauntlet’s Risk Analysis and Recommendations

Initial Risk Parameters

Parameter	Value
Collateral Factor (CF)	83%
Supply Cap	750,000 USDS
Borrow Cap	690,000 USDS
Protocol Seize Share	30%
Reserve Factor	10%

Interest Rate Model

Parameter	Value
Base Rate	0%
Multiplier	6.7%
Jump Multiplier	9x
Kink	90%

Interest Rate Curve

Utilization	Borrow APR	Supply APR
0%	0%	0%
90% (Kink)	6.03%	4.88%
100%	96%	86.4%

The interest rate curve features a kink at 90%, ensuring competitive rates while incentivizing stable utilization.

Supporting Data

• Volatility: Annualized 30-day log volatility of 11.82% reflects USDS’s convergence to its underlying value.
• Liquidity: Sufficient on-chain liquidity exists to trade up to 1M USDS with ~27% slippage. Initial supply and borrow caps are set conservatively, with future adjustments based on market evolution.

Voting Options

• Aye: Approve the proposal to activate a core lending market for USDS on Base with Gauntlet’s specified initial risk parameters.
• Nay: Reject the proposal.
• Abstain: Abstain from voting on this proposal. (editado)