[SLP-YFI-ETH] MIP6 Collateral Onboarding Application for Sushiswap YFI-ETH LP Token
- Who is the interested party for this collateral application?
- Provide a brief high-level overview of the project, with a focus on the applying collateral token.
Sushiswap is a decentralized protocol that allows for permissionless asset exchange and passive market making. It was forked from the Uniswap v2 codebase, and uses identical swap mechanisms and formulas. It uses an invariant function (
x * y = k) to quote prices of asset pairs based upon the relative quantity of those assets in a liquidity pool. If the price differs from the prevailing market price, arbitrageurs are incentivized to trade against the pool to correct the price discrepancy. Any user can join a liquidity pool by depositing equal valued amounts of each asset.
To incentivize users to provide liquidity, 0.25% of each trade is retained by the pool as a fee, increasing the underlying token balances of all participating LPs. However, being an LP is not without risk, as the pool will programmatically buy assets as the price falls or sell as the price appreciates. This leads to a phenomena known as “divergence loss”, where larger price moves cause LP tokens to underperform versus a benchmark of simply holding 50% of each asset.
Sushiswap v2 pool contracts are permissionless and non-upgradable - the switch for protocol fees has already been activated and governance has no further control over pool assets. Uniswap’s contracts (the basis of Sushiswap) have been audited and are among the most battle tested of any application, but it is possible that an undiscovered flaw could lead to loss of funds.
- Provide a brief history of the project.
Uniswap was first deployed to the Ethereum mainnet on November 2, 2018. On May 18, 2020, Uniswap v2 was launched. Sushiswap was launched as a fork of Uniswap v2 in late August, with the fee switch turned on and a native SUSHI governance token to incentivize deposits.
Since Sushiswap launch, the protocol has become a key decentralized trading venue with billions of USD worth of total value locked. Sushiswap is also beginning to operate on other sidechains and L2s, and has released a pair lending product called Kashi with other natively funded projects in development.
- Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.
Source Code: SushiSwap · GitHub
SLP-YFI-ETH token contract: https://etherscan.io/token/0x088ee5007c98a9677165d78dd2109ae4a3d04d0c
- Link any available audits of the project. Both procedural and smart contract focused audits.
Defisafety: SushiSwap Process Quality Review - PQ Reviews
Quantstamp: GitHub - quantstamp/sushiswap-security-review
- Link to any active communities relating to your project.
Gov forum: https://forum.sushiswapclassic.org/ 1
Discord: SushiSwap Community
- How is the applying collateral type currently used?
SLP-YFI-ETH LP tokens allow users to deposit equal values of the two constituent assets and earn trading fees proportional to their liquidity provided. When trading volumes are high relative to price drift, LPs can benefit from higher returns versus simply holding the individual assets.
- Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
Sushiswap LP tokens are permissionless assets, with no legal issuer or freeze/blacklisting functionality.
- Where does exchange for the asset occur?
SLP-YFI-ETH can be exchanged for its underlying constituents permissionlessly via the Sushiswap contracts and front end UI. YFI and ETH are traded on a wide variety of decentralized and centralized exchange venues.
- (Optional) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.
- (Optional) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.
- (Optional) List any possible oracle data sources for the proposed Collateral type.
SLP-YFI-ETH value can be determined based on the value of underlying assets.
- (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.
Disclosure: This collateral application is for informational purposes only, and does not constitute advice of any kind.
Copyright and related rights waived via CC0.