SAIP #34: Adding gmETH, gmBTC, gmARB and gmSOL cauldrons.
TL;DR: Add 4 new markets using gmETH, gmBTC, gmARB, gmSOL as collateral on Arbitrum.
Cauldrons parameters:
gmBTC and gmETH
-85% LTV
-5% Interest
-1% Borrow Fee
-6% Liquidation Fee
gmSOL
-75% ltv
-6.9% Interest
-1% Borrow Fee
-6% liquidation
gmARB
-75% LTV
-4.2% Interest
-1% Borrow Fee
-6% Liquidation Fee
Cumulative top up of 20m MIM across the 4 cauldrons, starting with low 6 figures top ups for beta testing.
Introduction
Abracadabra has consistently championed the GMX ecosystem. Since its inception, MagicGLP has stood out as one of the most effective assets within the Abracadabra Money ecosystem, serving as both a cost-efficient and widely utilized GLP-based vault.
With the introduction of GMX V2, which involves gm tokens as their new base assets, Abracadabra is poised to include them as collateral options. This move aims to empower users to capitalize on the attractive yields generated by gmETH, gmBTC, gmARB, and gmSOL.
Find out more on GMX V2 here.
The following proposal is structured as a Speedlane AIP as the new market has just finished their audit round, and the initial Arbitrum STIP rewards are about to be distributed, requiring swift execution from the DAO to start beta testing right away.
Beta testing will be carried out with low 6 figures top up of MIMs to each cauldron, to allow initial users feedback and results.
Risk Assessment
The proposed gm tokens are known for their reliable on-chain liquidity on Arbitrum, providing the flexibility to borrow a significant amount of MIM and ensuring prompt liquidation if necessary.
In this situation, the cauldron contracts utilized are a modified version of our usual cauldrons, rigorously tested internally to ensure their reliability.
An audit has been carried out by Guardian, one of the leading auditors that worked on GMX v2.
This audit can be found here.
GMX V2 Cauldrons code can be found here.
The 4 cauldrons have different LTV ratios to properly assess the volatility and liquidity of each of the tokens backing it (85% for BTC and ETH, 75% for SOL and ARB).
GMX V2 has also been live for a considerable amount of time, achieving more than 5.3B in volume and securing a TVL of more than $159m. More information and analytics on GMX V2 can be found here.
Profitability
Each of the four markets will feature competitive interest rates, aligning with the diverse risks associated with each collateral and its impact on the overall system.
Exact projections for MIM top-ups and earnings are challenging due to discretionary factors and fluctuating market demands.
Please note that the ARB interest rate is intentionally set lower to stimulate growth and utilization within the dynamic Arbitrum Ecosystem.
Technology
As stated in the preceding paragraph, these four markets feature a distinct iteration of our cauldrons, tailored specifically to manage the use of gm tokens as collateral with looping.
The pricing of collateral is determined through Chainlink oracles, and the newly designed cauldrons enable interchangeable settings for Interest, Borrow Fee, and Liquidation Fee.
Each of these parameters can be subject to modification through a DAO vote.
Note: the following cauldrons will be able to be used together with degenbox strategies to users to enjoy boosted APYs coming from GMX STIP ARB distribution. 10% of the auto compounded ARB will be kept as treasury revenue.
Voting
Voting for the following proposal is now live and will last 48 hours. Link to the snapshot can be found here.
If the proposal was to pass, the 4 cauldrons will be topped out and beta testing will start right away.
The proposal has passed!
