SIP - 62: Removal of LUSD, DAI, and FRAX as USDs Collateral

Governance proposals (discussed)
1

Author: Sperax Core Team
Created: June, 10, 2024
Labels: USDs-Parameters

Summary

The USDs stablecoin, currently, utilizes six collateral assets to maintain its peg to the US dollar. This proposal seeks to streamline and optimize the collateral portfolio by removing three assets: LUSD, DAI, and FRAX.

Motivation

  1. Over 96.8% of the stablecoin market cap on Arbitrum is USDT and USDC
  2. Sperax is coming up with its own CDP stablecoin

Overview

LUSD, DAI, and FRAX collectively represent only approximately 3% of the total stablecoin market capitalization. This limited share suggests that their removal will have a negligible impact on the overall stability and utility of USDs.

We are actively developing our Collateralized Debt Position (CDP) stablecoin. This upcoming product will offer users an alternative decentralized stablecoin option within our ecosystem, reducing the need for external stablecoins like LUSD, DAI, and FRAX as collateral.

Upon passing of this proposal. New minting of USDs will stop from LUSD, DAI, and FRAX. There will be zero redeeming fees for redeeming from LUSD, DAI, and FRAX

Technical Specification

  1. Stop minting USDs from LUSD, DAI, and FRAX
  2. Zero redeeming fees for redeeming USDs with LUSD, DAI and FRAX

Voting

  • For: Remove LUSD, DAI, and FRAX as USDs collateral
  • Against: Do not implement this proposal
  • For
  • Against
0 voters
2

It brings more liquid and even more safer stablecoin USDs, great proposal!

1 Like
3

LUSD, DAI and FRAX do not have strong liquidity on Arbitrum. It takes a lot of time to move those tokens to Ethereum thereby causing opportunity costs to liquidity providers looking to liquidate the assets.

4

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