Summary
This proposal seeks community support to introduce wBTC lending and vaults within the Fluid Protocol. The initiative aims to expand product offerings on Fluid to enhance the protocol’s competitiveness and market positioning.
Proposal
The Instadapp team proposes to add wBTC to the liquidity layer and add the following vaults:
- wBTC<>ETH
- wBTC<>USDT
- wBTC<>USDC
- ETH<>wBTC
- wstETH<>wBTC
- weETH<>wBTC
Recap of Fluid Vault Parameters
Fluid’s vault protocol features some familiar as well as some new concepts for understanding the vault’s limits and parameters. See the following below:
C.F (Collateral Factor): Limit till which user can borrow.
L.T (Liquidation Threshold): Limit at which the user starts to get liquidated.
L.M.L (Liquidation Max Limit): Limit above which the user gets 100% liquidated.
L.P (Liquidation Penalty): Penalty at liquidations. Applied between L.T to L.M.L.
W.G (Withdrawal Gap): Extra gap on Liquidity Layer limits reserved for liquidations.
Liquidation Max Limit or L.M.L which denotes a level at which a position is fully liquidated. While most positions will incur liquidations over time the Liquidation Max Limit prevents the debt from becoming undercollateralized in a sudden downfall.
wBTC/ETH Vault Parameters:
The proposed vault will feature the following initial parameters:
- Collateral Factor (C.F.): 90%
- Liquidation Threshold (L.T.): 94%
- Max Liquidation Limit (L.M.L.): 96%
- Liquidation Penalty (L.P.): 2%
- Withdrawal Gap (W.G.): 5%
Supply Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 25%
- Expand Duration: 12 hours
- Base Withdrawal Limit: $5M
Borrow Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 20%
- Expand Duration: 12 hours
- Base Debt Ceiling: $7.5M
wBTC/USDT Vault Parameters:
The proposed vault will feature the following initial parameters:
- Collateral Factor (C.F.): 80%
- Liquidation Threshold (L.T.): 85%
- Max Liquidation Limit (L.M.L.): 90%
- Liquidation Penalty (L.P.): 4%
- Withdrawal Gap (W.G.): 5%
Supply Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 25%
- Expand Duration: 12 hours
- Base Withdrawal Limit: $5M
Borrow Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 20%
- Expand Duration: 12 hours
- Base Debt Ceiling: $7.5M
wBTC/USDC Vault Parameters:
The proposed vault will feature the following initial parameters:
- Collateral Factor (C.F.): 80%
- Liquidation Threshold (L.T.): 85%
- Max Liquidation Limit (L.M.L.): 90%
- Liquidation Penalty (L.P.): 3%
- Withdrawal Gap (W.G.): 5%
Supply Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 25%
- Expand Duration: 12 hours
- Base Withdrawal Limit: $5M
Borrow Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 20%
- Expand Duration: 12 hours
- Base Debt Ceiling: $7.5M
ETH<>wBTC Vault Parameters:
The proposed vault will feature the following initial parameters:
- Collateral Factor (C.F.): 90%
- Liquidation Threshold (L.T.): 94%
- Max Liquidation Limit (L.M.L.): 96%
- Liquidation Penalty (L.P.): 2%
- Withdrawal Gap (W.G.): 5%
Supply Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 25%
- Expand Duration: 12 hours
- Base Withdrawal Limit: $5M
Borrow Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 20%
- Expand Duration: 12 hours
- Base Debt Ceiling: $7.5M
wstETH<>wBTC Vault Parameters:
The proposed vault will feature the following initial parameters:
- Collateral Factor (C.F.): 88%
- Liquidation Threshold (L.T.): 91%
- Max Liquidation Limit (L.M.L.): 94%
- Liquidation Penalty (L.P.): 2%
- Withdrawal Gap (W.G.): 5%
Supply Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 25%
- Expand Duration: 12 hours
- Base Withdrawal Limit: $5M
Borrow Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 20%
- Expand Duration: 12 hours
- Base Debt Ceiling: $7.5M
weETH<>wBTC Vault Parameters:
The proposed vault will feature the following initial parameters:
- Collateral Factor (C.F.): 80%
- Liquidation Threshold (L.T.): 85%
- Max Liquidation Limit (L.M.L.): 90%
- Liquidation Penalty (L.P.): 5%
- Withdrawal Gap (W.G.): 5%
Supply Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 25%
- Expand Duration: 12 hours
- Base Withdrawal Limit: $5M
Borrow Configuration
- Class: 0 (Guardian enabled)
- Mode: 1 (with interest)
- Expand Percent: 20%
- Expand Duration: 12 hours
- Base Debt Ceiling: $7.5M
Rewards Setup
To further promote wBTC markets on Fluid, we propose to distribute $100k wBTC rewards to the wBTC<> USDC and wBTC<>USDT vaults per month, $50k each. Incentives performance will be reviewed in the end of the 1 month period and will be prolonged if needed.
| Rewarded Pool | Reward | Reward Duration |
|---|---|---|
| wBTC/USDC Vault | ~0.8 wBTC ($50k worth of wBTC) | 1 month |
| wBTC/USDT Vault | ~0.8 wBTC ($50k worth of wBTC) | 1 month |
Liquidity Layer
Proposed wBTC Rate Curve
- Utilization 0%: 0% Rate
- Utilization 80%: 5% Rate
- Utilization 100%: 100% Rate
Proposed Token Config for wBTC:
- Threshold: 0.3%
- Fee: 10%
- MaxUtilization: 100%
Summary of Changes to Fluid:
- Add wBTC to the liquidity Layer
List the following vaults:
- wBTC<>ETH
- wBTC<>USDT
- wBTC<>USDC
- ETH<>wBTC
- wstETH<>wBTC
- weETH<>wBTC
Motivation
wBTC is a widely used collateral asset across DeFi, and is a natural addition to the base set of assets already presented on Fluid. Fluid users will have the best conditions on the market by a wide margin, enabling up to 90% LTV while the average max LTV on the market is around 70%.
Risks
wBTC is one of the most widely used assets in DeFi with the deepest liquidity pool on Uniswap.
WBTC is an ERC20 tokenization on Ethereum of locked BTC assets on the Bitcoin network. The full procedure of minting and redeeming wBTC is explained WBTC Network.
Overall, the risks associated with wBTC as collateral are minimal and accepted by the broader DeFi community.
Result
The successful addition of the wBTC to the liquidity layer and wBTC<>ETH, wBTC<>USDT, wBTC<>USDC, ETH<>wBTC, wstETH<>wBTC, weETH<>wBTC vaults to the Vault protocol with the aforementioned parameters an on-chain vote is required from governance to finalize and approve this proposal.
This proposal also transfers $100k from the DAO Treasury to the team Multisig to incentivize wBTC markets on Fluid.
