Tl;dr: Add a new BTC and WETH market on Arbitrum, to allow market makers to borrow MIM and pair it with USDT and USDC to improve liquidity for MIM on chain.
Both Market Parameters:
Interest: 6%
Borrow Fee: 0.25%
MCR: 80%
Liquidation Fee: 6%
Initial top up of 1 m $MIMs each, with the possibility of scaling up to 3m depending on volumes and liquidity without further votes.
Introduction
In the last couple of days, multiple market makers have expressed interest in borrowing MIM tokens to then pair them with USDT and USDC to provide liquidity in the multiple MIM pools around different networks.
Currently, its is difficult for market makers to borrow MIM while using naked BTC assets, and their infrastructures might lack the ability to correctly hedge BTC and ETH based LP tokens such as yvTricrypto or gmBTC.
In order to help them borrow MIM to correctly hedge their LP position, the current proposal aims at deploying swiftly those 2 markets.
Risk Assessment
From a risk assessment point of view, these two markets would have one of the lowest possible risk profiles possible.
On and off chain liquidity for WBTC and WETH is deep and easily accessible for liquidators, especially on the sizes currently discussed.
Additionally, the DAO already has such assets accepted as collateral in other forms.
This proposal requires swift action because of the low risk of such collaterals, as well as the timing that would allow market makers to join the pools.
Profitability
With the given parameters, and an initial top up of 1m MIM, this cauldron generates approximately 60k $MIM each over a one year time frame for the protocol and $SPELL holders. The number would scale up accordingly to the amount of MIM deposited into it.
Interest will be able to be scaled up accordingly following 24h voting periods.
Most importantly though, these cauldrons would allow market makers to deepen the MIM liquidity, and therefore improve the MIM borrowed from other more profitable markets.
Technology
The following cauldron would use V4 cauldron contracts and would be deployed on Degenbox. Adding variable interest rate, upgradable oracles, and built-in strategy rebalance functions (in case a degenbox strategy were to be proposed on top of it).
WBTC and WETH Chainlink oracle are available and can be found here and here.
Voting
Given the speedlaned nature of this proposal, the snapshot is already live and voting will continue for 24 hours, after which the cauldrons will be deployed and top up executed if voting is concluded positively.
Snapshot link can be found here.
The proposal has passed.