[Proposal] Add ETHx as collateral to mint R

General
1

Proposal to introduce ETHx as collateral to mint R

The purpose of this proposal is to introduce a new form of collateral - ETHx, a liquid staking derivative from Stader alongside existing options from Lido & RocketPool

Background

Stader is a non-custodial liquid staking platform with $120Mn+ TVL across 7 PoS blockchains (Ethereum, Polygon, Bnb, Hedera, Fantom…); with Ethereum being the latest to launch on the 10th of July and is already at ~20Mn TVL & a $7M+ liquidity depth across Curve & Balancer in just 3 weeks and we’re just getting started…

The introduction of ETHx provides an opportunity for diversification & broadening the base while mitigating concentration risks. However, we do acknowledge the concerns around the potential risks associated with a newer protocol. They can be broadly segmented into three buckets and are addressed as such

1. Security

Given ETHx is a relatively new token, there might be concerns around security. While we might be new to Ethereum, we have built LSTs on 6 chains prior to this and security has always been paramount for Stader. All our smart contracts across every chain have been audited at least twice. The ETHx smart contract in particular has been triple audited by leading smart contract security partners Sigma Prime, Halborn and Code4rena

2. Governance

Stader’s governance is led by the Stader DAO - a wide variety of $SD holders who have a say in key decisions pertaining to the protocol. You can find the Stader Governance Forum here.

For ETHx, we have the Oracle Node Operator Genesis Committee of distinguished community members. You can learn more about the ETHx ONO committee here

3. Centralisation

Stader is a non-custodial & decentralized liquid staking solution based on DAO governance. $SD is Stader’s native governance token. ETHx is based on the foundation of decentralization with permissionless node operators getting majority of the ETHx TVL as demand scales, starting with an initial allocation of 70%

The ETHx contract upgrades are managed by Admin time-lock contract with a 6 on 9 Multi sig (2 Stader members and 7 external members) as the proposer.

You can learn more about how Stader envisions embracing the path of decentralization here

References/Useful links

Parameters

Since ETHx is a newer token with a lower market cap, we are proposing the following conservative parameters for using ETHx as collateral to mint R, alongside a comparison with the existing parameters for stETH and rETH

stETH rETH ETHx
Minimum Collateralization Requirement 120% 120% 150%
Borrowing spread 0.50% 1.00% 1.00%
Redemption fee 1.50% 2.00% 2.00%
Collateral cap uncapped 20,000 rETH 3,000 ETHx
Collateral cap per Position uncapped 1,000 rETH 150 ETHx

We would be happy to adjust the above parameters based on feedback from the community and core Raft team and would be happy to answer any questions on ETHx, Stader or the proposal itself. Adding ETHx as a market for R collateral will be mutually beneficial for both Raft and Stader, as it will increase the utility for ETHx, while boosting Raft’s TVL and R’s rollout. The Stader team can be reached at any time via the Stader Discord server

9 Likes
2

Great proposal @Dovah .
I have been following Stader since Terra LUNA days.
Onboarding Stader would send the right message, supporting a LSD protocol at early stage, being one of its first adopters.
Moreover, a partnership with Stader means, their multi chain presence and proficiency could be leveraged in the future to diversify the Raft protocol not only across other EVM chains, but Rust based chains too.

My only suggestion would be to lower the Collateral Cap keeping in mind that current onchain liquidity is ~2500 ETHx, and its been only 1 week since the liquidity inflow into the pools begun, hence a lack of battle testing.

source [as of 3rd August] : https://dune.com/maybeYonas/raft-protocol-collaterals

Screenshot 2023-08-03 at 18.44.16
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2 Likes
3

I support this proposal as is, and IMO once ETHx ticks these 3 boxes:

  • been mainnet for 3 months, AND
  • has a TVL of $50m or above, AND
  • has a on-chain liquidity of $20m or above.

you can further relax the collateralization requirement to 120%.

2 Likes
4

I do support this proposal to add ETHx

5

GM @Dovah, thank you for putting together this comprehensive proposal. The Raft team will review it internally over the next few days and get back with our views. In the meantime, it’d be great to hear more of the wider Raft community’s thoughts, especially on the parameters.

6

I think it’s to risky to add ETHx as collateral

7

I think adding new risk to a new protocol is not a good idea. Key imo is to keep the protocol simple and highly secured. Stader is yet to prove itself in the market and I am not sure it will be a net benefit to Raft.

8

500 ETHx for a start sounds good. if we should proceed with onboarding ETHx.
However, we also need to consider, we haven’t onboarded protocols like Swell, ORIGIN, with much better circulating supply and onchain history.

9

I support this proposal. I agree on the parameters listed until ETHx TVL reaches $50M

1 Like
10

Great thread, Dovah.

Although ETHx is new, having been launched just last month, the Stader team has already proven itself over the past years with other LSTs, and I firmly believe ETHx will have a bright future in the Ethereum LSD space.

I fully support the proposal, and I believe that ETHx will be a great addition.

1 Like
11

I believe 500 ETHx is too low, given that many whales have produced 1000+ ETH, and that you should set the maximum at 1000 ETH.

12

I’m fully supportive of the proposal to introduce ETHx as collateral for minting R.
The comprehensive background and detailed approach from Stader showcase a commitment to security, governance, and decentralization.
The triple audit of the ETHx smart contract and the involvement of a distinguished committee instill confidence in its viability.
This initiative adds a valuable layer of diversification and contributes to the growth of the ecosystem. Kudos to the team for their dedication and thoughtful planning.

1 Like