New proposal would add fourth asset to Red Bank with support for stLUNA
Mars’ Red Bank currently supports three assets:
- Anchor Protocol (ANC)
- Terra (LUNA)
- Terra USD (UST).
Delphi Labs just pushed an on-chain vote live to add a fourth: Staked Luna (stLUNA).
A liquid staking derivative of LUNA offered by Lido, stLUNA allows users to earn staking rewards on their LUNA without actually staking their tokens.
Last week, Delphi Labs sought feedback from the community on adding stLUNA as a collateral asset for lending and borrowing on the Red Bank.
From their initial forum post:
There is strong demand for staked Luna on Terra. Currently, 20% of Luna is staked with bLuna. stLuna is an upgrade of bLuna on Terra which improves Terra’s liquid staking utility and decentralization. More information here.
The addition of stLuna on Mars would benefit the decentralization and security of the Terra network, benefiting the Terra ecosystem as a whole. Furthermore, holders of stLuna would be able to use their stLuna as collateral to borrow other assets while earning staking rewards on top. This will attract a larger audience to Mars as market participants borrow against their stLuna or lend their stLuna for yield. Ultimately, this will generate more fees for Mars with the new borrow demand.
After running stLUNA through the Red Bank Asset Listing Risk Framework, Delphi Labs proposes the following risk parameters on stLUNA:
- Loan-to-Value: 40%
- Liquidation Threshold: 50%
- Liquidation Bonus: 15%
- Optimal Utilization: 45%
- Interest Rate Model: This asset will use a 2-slope interest rate implementation with the following parameters:
- Base Rate (interest rate at 0% utilization): 0%
- Slope 1: 7%
- Slope 2: 300%
- Optimal utilization: 45%
- Whether the asset will be usable as collateral: Yes
Read the full forum post for background on additional risks around adding stLUNA. The voting period will last ~3 days. If successful, it will be implemented in the Fields after a mandatory 2-day review period as detailed in the Mars Improvement Process.
All Mars stakers (xMARS) can now ascend to the Martian Council to vote on Delphi Labs’ proposal at https://app.marsprotocol.io/#/council.
If the vote is successful, Mars will support its fourth asset, and it could unlock interesting yield farming opportunities in the Fields of Mars.
The future awaits!
This article does not constitute investment advice. Before interacting with Mars, review the project disclaimers here.