Summary: This proposal recommends adding xSOL, a wrapped Solana token, as collateral to AlgoFi.
MakerDAO, a popular decentralized lending platform, has been successfully using multiple tokens as collateral for its loans. By expanding the list of accepted collateral tokens, AlgoFi can attract more users and increase its liquidity. Adding xSOL as collateral would allow Solana users to use their holdings as collateral to borrow other assets, which will be beneficial to both communities.
Proposal:
Add xSOL as collateral to AlgoFi with a Collateral Factor of 70%, which is the same as BTC.
The AlgoFi team will need to perform due diligence and ensure that xSOL meets the platform’s risk management standards.
Adding xSOL as collateral to AlgoFi would be a significant step in expanding the platform’s capabilities and attracting more users. MakerDAO has shown that using multiple tokens as collateral can be a successful strategy, and AlgoFi can follow in its footsteps.
xSol failed to attract significant liquidity on algorand and therefore liquidators might not be able to profit from liquidations on-chain directly which is a security risk. in general, if a wrapped version of Sol would be listed on a lending protocol i would not list it with a cf of 70%, the performance issues of the solana blockchain means the arbitrage accross chains could be disturbed which again is a risk for the algofi protocol
although i am normally open to projects i dont think glitter finance deserves to be promoted via the integration of xSol on Algofi (see the statements of their CEO across twitter). i know this shouldnt be a reason to not list xSol but in that case i just cannot support it as glitter clearly doesnt care about algorand
I’m all for finding good assets worth using for collateral, but I am also am not in support of this for the same reasons @lobo mentioned, primarily that it is a low liquidity, high risk asset with little expectation of the situation improving due to the comments by the CEO.
with all due respects, I will not touch anything related to Glitter Finance let alone allowing it to impose risks on Algofi. So I’m going to vote NO for this kind of proposal if any.
Thanks.
Agree with above replies. Idea is good to add more quality assets that can be collateral, but xSol is not one of them. Would much prefer Meld Gold and Silver assets. This could attract a very different crowd, who are wary of dollarized assets. Might really help attract interest in Middle East too for algofi platform.
Thanks for the replies everyone, especially @lobo. The idea of adding a quality ASA to use as collateral seems to be broadly supported, however in xSol’s case there were two points of concern:
Risk it may bring due to low liquidity where liquidators might not be able to profit from liquidations on-chain directly
The comments of the CEO of Glitter towards Algo
Regarding point 1, how might this be resolved? Would there need to be more xSol on Algorand and if so what dollar amount would be “enough” before this could be considered? On a sidenote, it is also worth pointing out that even though there is a low amount of bridged xSol, using the bridge takes about 1 minute so liquidating the ASA would be simple, especially if we used a lower collateral factor
of say 40%. As opposed to goBTC which takes about 1 hour before you can unmint/mint it. (I’m a big user of AlgoMint and use it a lot, but minting BTC takes a long time)
Regarding point 2, the comments made by the CEO of Glitter Finance, I understand that this has caused some tension within the Algorand community, however some background is important. First it sucks when you build something that you care about suffer or when it appears that little help was given in the first place. The impact of the myalgo hack (this was the time he sent out those messages) amplified this and many other users felt bleak too. However I’d argue that just blocking a project because of “feelings” sounds like a poor business decision. With that said though, what do you think could be done to go towards mending this relationship between Algorand and Glitter?
Thanks again for the input, this is my first proposal “temperature check”. Hope I’m doing it right.
if solana works and if the bridge works. so we are dependent on those two things
they were given a grant, what additional help do they need? and according to the CEO building a bridge is super easy
i agree that normally we shouldnt do this. but can you ensure that tomorrow glitter wont close down because they dont care anymore about algorand? if something breaks on their website will they fix it if they dont care anymore?
if we would list SOL we should list wormhole SOL imo