So we’ve been recently been discussing the possibility of uniswap liquidity tokens as collateral in this thread, for more context on why this may be valuable and isn’t obviously risky, feel free to read over that thread.
Reasons to include the Eth-Dai liquidity token
Personally, I think the Eth-Dai token would make good collateral for the following reasons:
- Being able to use it for collateral incentivises the uniswap-v1 ETH-DAI pool, this is beneficial as it allows people to trade Eth-Dai with less slippage.
- It is more valuable to hold when ETH is trading sideways rather than upward or downward. This makes it more likely actors will wish to use it for leverage when they expect no major change in Eth price.
- It is the largest liquidity pool of the discussed uniswap liquidity tokens at just under 6 million dollars worth of assets and it is the 3rd largest uniswap liquidity pool overall.
1. Who is the interested party for this collateral application?
2. Provide a brief high-level overview of the project, with a focus on the applying collateral token
Uniswap is a decentralized Constant Product Market Maker that operates entirely on-chain with no admin tokens. There are two user groups, the first: traders use uniswap to swap one crypto-asset for another. The second: liquidity providers who provide liquidity for traders in exchange for a small fee on every trade. See https://uniswap.org/docs/v1 for more details.
3. Provide a brief history of the project
I’m going to leave this for someone else to provide. I’m not 100% sure how relevant it is for this particular collateral type and I suspect that most people are aware of uniswap.
4. 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.
5. Link any available audits of the project. Both procedural and smart contract focused audits.
Consensus Dilligence: https://medium.com/consensys-diligence/uniswap-audit-b90335ac007
Runtime Verification: https://github.com/runtimeverification/verified-smart-contracts/tree/uniswap/uniswap
6. Link to any active communities relating to the project.
7. How is the applying collateral type currently used?
To the best of my knowledge the uniswap liquidity tokens are not used by any other protocols directly. There are a number of dashboards that display the amount available, and some apps for calculating profit, but otherwise these appear to be a largely untapped resource.
8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
No organisation bears legal responsibility for the collateral. Dai, Eth and the uniswap tokens are all permissionless.
9. Where does exchange for the asset occur?
I am not aware of any markets for the ETH-DAI uniswap liquidity tokens outside of uniswap itself. Uniswap allows redemption between liquidity tokens and the underlying assets at any time. By definition, there is always the required liquidity for this redemption.
10. (Determined by Legal Domain Team) Has the 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.
11. (Determined by Legal Domain Team) 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.
12. (Optional) List any possible oracle data sources for the proposed Collateral type.
Not sure. I suspect the best way to go about this is to have oracles report the prices for the underlying assets and then get the ratio from the uniswap contract.
13. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.
No parties that I know of, though I suspect that anyone willing to bid on ETH collateral would also be willing to bid on ETH-DAI liquidity tokens.