Increase Collateral Factor of DPI to 75% + List DPI/ETH LPs_

Summary

Increase DPI collateral factor from C4 (45%) to C6 (75%)
List DPI/ETH liquidity pool tokens from Uniswap and Sushiswap

Motivation

Since listing DP its TVL has increased by 15x to over $200M and liquidity by 5x to $100M on Uniswap v2. CREAM currently has pretty good penetration into DPI market with $5M of DPI on the platform today. However there is a proposal on Aave to list DPI with 50% LTV (higher than current CREAM market) that is likely to pass because DPI controls 65k AAVE tokens to vote in governance. If we do nothing, we will lose our lead in the market for the biggest index in crypto.

Description

DPI has become a mainstay of DeFi ecosystem now being referenced by almost all publications as a reference for the entire market (see Bloomberg). Majority of it’s growth comes without token incentives unlike all of it’s competitors and it has very sticky users (retention analysis) which means once we get DPI users into CREAM they are likely to stay and keep using our platform. There is also a Chainlink oracle for DPI/USD which has been operational since end of last year.

On top of the $100M DPI/ETH liquidity, since DPI is a fully collateralized index token it can be redeemed for its underlying tokens (YFI, UNI, AAVE, etc.) which are all highly liquid themselves. So for the purposes of liquidations the effective liquidity of DPI is the sum of all underlying token liquidity + DPI/ETH liquidity.

For example on Matcha.xyz for a 200 ETH order, dumping DPI has less slippage than dumping YFI (before taking into account that you can redeem and dump individual tokens instead of DPI directly)


(we are also working on getting sDPI from synthetix and listing on Curve for even deeper liquidity but that’s nowhere near done yet, just a heads up)

Because of it’s liquidity, price feed, and position leading the market as the biggest index in crypto I propose we upgrade its collateral ratio to C6 (75%) in the “Major and Stables” category.

About 25% of all DPI is locked up in Uniswap liquidity so we should also list LP tokens as well since Aave AMM market is now live and might list these tokens soon. So to capture the entire DPI market I propose we list DPI/ETH LP tokens from Uni and Sushi.

For

Increase DPI collateral factor to 75% and list DPI/ETH LPs

Against

Do nothing


P.S.

Not really important for this proposal but listing LPs should also drive DPI/ETH liquidity from Uni to our partner Sushi because if you aren’t using your Uni LP tokens to farm INDEX tokens you might as well migrate to SLP and earn SUSHI while you are lending/leveraging on CREAM.

3 Likes

Strongly in favor. DPI is on the roadmap for both AAVE, Maker, and others. It is incredibly liquid as are its components. With over 200M TVL and its status as the dominant DeFi Index, “Major and Stables” feels appropriate.

1 Like