What are you voting for?

• Extending 2,000,000 XAI of Credit to the LUSD silo.

Liquidity USD

Name: Liquity USD

Ticker: $LUSD

Contract Address: 0x5f98805a4e8be255a32880fdec7f6728c6568ba0

Description: $LUSD is an overcollateralized stablecoin by Liquity which is backed by ETH collateral Liquidation Threshold: 90%

Absolute Parameters

Oracle: Chainlink LUSD/USD price feed

Liquidation: Silo’s liquidation engine can liquidate LUSD collateral efficiently.

Protocol-Wide Parameters

As discussed in SiloDAO’s adopted Risk Framework, no individual silo will receive a credit line extension exceeding 2,348,150 * Liquidation Threshold in $XAI. In the case of $LUSD, this upper limit is 2,113,335 $XAI.

Silo-Specific Parameters

$LUSD has relatively high on-chain liquidity across multiple exchanges.

Simulating sales on Matchaswap indicate that swaps of even 5,000,000 $LUSD for $ETH would only incur slippage of 0.9%.

As such, the binding constraint for a credit line to $LUSD is our Protocol-wide Parameters (i.e. $XAI on-chain liquidity) rather than $LUSD itself.

Recommendation

$LUSD is the largest proper decentralized stablecoin backed by only $ETH as collateral. It should be noted that $LUSD does have a history of upward de-pegs which can be accounted for by our liquidation engine. Given that on-chain liquidity of $LUSD is relatively high, we recommend a 2,000,000 $XAI credit line. We recommend reassessing utilization and adjust upwards to our Protocol-Wide Limit as demand requires.

We recommend continued assessment of on-chain liquidity of both $LUSD and $XAI to ensure that it remains within a safe range that will allow liquidations to occur as normal.