Adding 3 new assets for collateral on Public Preview

Summary (TL;DR)

This is a discussion toward adding 3 new assets to be used as collateral on the lending protocol.

Background

Hifi currently uses two common fungible asset for testing out the Public Preview of the lending protocol. (Specifying ‘fungible’, as we know NFTs as collateral are also upcoming). At the time of writing this, the assets are wrapped BTC and ETH on the Polygon network. The assets used as collateral are documented here in the Hifi docs. You can see them directly on the protocol’s borrowing interface here as well.

Problem

As there are only two types of token available, the lending protocol is quite limited from the perspective of collaterals. Even tough NFT lending is upcoming, we need to keep in mind the usage of the protocol using traditional cryptocurrency (aka fungible tokens or coins) assets as well, as the protocol was designed from the ground up with this feature in mind.
Having more collateral entries might also generate more interest from the public to try out Hifi’s fixed-rate solutions. Lot of people keep BTC for future value, and ETH for gas expenses. However, they would certainly benefit from providing their other holdings as collateral for a fixed-rate loan.

Solution

This proposal suggests having a total of 5 different assets available as collateral on the lending protocol, while keeping the current wrapped BTC and ETH tokens. As such, this discussion should open the door for 3 new collaterals to be available on public preview. The discussed collaterals will be limited to tokens within the scope of the top 30 tokens by market cap. Selected tokens can be ERC-20, BEP2 or any other standard that the protocol is able to use. This will require feedback from Hifi development team and administrators into this forum thread, to understand the limitations in this matter, regarding standards, before a proposal vote is created.

Requirements

Success of this proposal is reached once 3 additional tokens are available to provide as collateral on the Hifi Lending Protocol, for a total of 5 (excluding non-fungible assets).

KPI’s

Not sure if this is a proper KPI, but everyone’s input in this thread will be taken into consideration, to generate a snapshot voting event that will give everyone a voice into selecting collaterals.
Try suggesting your collaterals by using their capitalized token names as well as a description explaining in details why it should be used. Be convincing and don’t forget to elaborate, so others think it’s also a good idea!

Example

Token 1:

  • Name: BNB
  • Explanation: < Your excuses here for using BNB as collateral! >

Token 2:

  • Name: SOL
  • Explanation: < It’s the new kid on the block >

Token 3:

  • Name: MATIC
  • Explanation: < It makes sense, because we need to spend Polygon gas anyways >

When this proposal is ready for snapshot, a multiple-choice vote will be created using weighted voting type. Each token that were discussed in this thread will be available to vote on. Reminder that the suggested tokens must be in the Top 30 asset by market cap at the time of snapshot proposal creation, and has a standard compatible with the lending protocol (ERC-20, BEP2 or other fungible standard as confirmed by the Hifi Team below.)

Conclusion

Given all the upcoming changes and announcements from the team, and potential conflicts with HIP 1, no specific timeline is defined for now. We also need a maximum of data from the community into this thread, to trigger a voting event that will suggest 3 specific collaterals too add, from the top 3 results from weighted voting.

A basis for the timeline would be to create a snapshot, one month after the following events:

  • HIP 1 is complete
  • A new market is available on the Lending Protocol

This gives enough time for everyone to discuss their token suggestions.

4 Likes

Im glad that someone else also thinks we need more collateral types on the Polygon Public Preview.

Be aware, that HiFi can only add tokens, that are available on Polygon. So this would typically remove things that are in the top 20, such as ADA, XRP, SOL, etc.

I’d recommend looking at things on this list Top Polygon Ecosystem Coins by Market Capitalization - CoinGecko for suggestions. But in my opinion, for our first collateral, we should onboard stablecoins, as these are the best collateral types as they change in price very little, which usually translates into very little risk and gives us all something easy to onboard. Perhaps some of the suggestions listed here? Adding a new market on Public Preview - #7 by Mainbrain

6 Likes

Getting some questions to brainstorm in here.

Token 1: BNB >> Does this work with Polygon? Does have enough liquidity on Polygon to get traction from the markets? Stats of people getting loans using BNB?

Token 2: SOL >> Is decentralized enough? Is secure and safe? Any numbers to show the usage of SOL on polygon?

Token 3: Matic >> Can I use it on Ethereum? Do I need to transfer to Ethereum once the protocol goes live on Ethereum? Is there a market for lending and borrowing using MATIC?

Are there more questions to be added?

3 Likes

A question I have probably depends on the timing and weighing up competing priorities. As the focus is (and I feel should be) on the NFT side of things, this is probably not going to happen quickly. Given Ethereum Mainnet launch is under 6 months away, is there significant benefit to devote time and resources to adding multiple assets for collateral on Polygon when it may be redundant after September? If this automatically carries over and is not redundant or can be implemented not at the expense of other priorities, then I feel different as I definitely want more collateral types long term.

1 Like

This is a great idea, thanks for this list!

1 Like

I agree that this should not be competing with internal priorities.

However, with my proposal, I assume the following:

  • Governance is live, this means they are internally prepared for it.
  • Adding new collaterals was hopefully designed to be easy, from a development perspective.
2 Likes

My recommendation is to create a separate post and begin the discussion around defining the process we should go through to add new collateral types. Researching what other communities do starting with MakerDAO, Compound, AAVE, and Euler. We should extract what we like and don’t like between their approaches. With a process in place we will avoid opinion and bag wars.

Each new collateral we add completely changes the risk profile for lenders and LPs. So it’s important to consider what would drive away potential lenders vs. what will attract them and how to balance those tradeoffs.

3 Likes

Thank you.

As I am digging more into DAO and governance models, I am evolving my thought process and changing my perspective on how to add collaterals.

I am reconsidering the validity of my current proposal here - And this is part of a learning process and experimentation by sharing my ideas. Hopefully it helps others as much as it helps me better understand how to build a sustainable growth model that considers risk mitigation.

I am keeping in mind the reliability that’s needed with a fixed rate lending protocol. When people are going to use fixed rate, they have the expectation of reliability and stability. The main idea of fixed rate being confidence of having less risk, I understand risk profile needed for each collateral that we want to onboard.

2 Likes

As part of the process that will be established, we will also discuss best practices and compliance.
The regulatory landscape in the cryptosphere will continue to take shape, and an assessment of the coin’s (tokens) risk will eventually be a requirement for all business types.
The coin (token) risk analysis should be conducted prior to offering a new type of collateral in the protocol. Even testing a new collateral in the market should not occur without completing this process.
Otherwise, The protocol, the users, and the market could be exposed to an unnecessary level of risk.

1 Like

Hi, how to vote to get airdrop? :v::slightly_smiling_face:

Go to (Snapshot) to vote. Reach out to us on discord Hifi Finance if you have any questions.