[UNI-V2-DAI-USDT] MIP6 Collateral Onboarding Application

[UNI-V2-DAI-USDT] MIP6 Collateral Onboarding Application for Uniswap V2 DAI-USDT LP Token

1. Who is the interested party for this collateral application?

@Andy_McCall

2. Provide a brief high-level overview of the project, with a focus on the applying collateral token.

Uniswap is a decentralized protocol that allows for permissionless asset exchange and passive market making. Uniswap has been covered extensively in other collateral onboarding apps. Here are some links relevant to the specific pool

The UNI-V2-DAI-USDT LP token is the pair consisting of DAI and USDT. This token currently has $9,867,884 of liquidity across 212 holders at the moment of writing this post (Jan 1, 2020).

USDT is the 3rd most liquid token on uniswap at time of writing. Itself having $181,423,852 in exchange liquidity.

It is the also 3rd most liquid DAI swap (at least among semi reputable tokens) only after ETH and USDC

3. 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. Liquidity increased sharply beginning in late August when Sushiswap began incentivizing deposits. The UNI governance token was launched in September, partly in response to liquidity migrating to Sushiswap, and incentives helped Uniswap regain primacy in decentralized exchange liquidity.

Uniswap it is the 4th protocol by total value locked following DeFi Pulse

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.

Whitepaper: https://uniswap.org/whitepaper.pdf

Documentation: https://uniswap.org/docs/v2/

Website: https://uniswap.org/

Source Code: https://github.com/Uniswap

UNI-V2-DAI-USDT token contract: https://etherscan.io/address/0xb20bd5d04be54f870d5c0d3ca85d82b34b836405#code

5. Link any available audits of the project. Both procedural and smart contract focused audits.

Audit report: https://uniswap.org/audit.html

6. Link to any active communities relating to your project.

Twitter: https://twitter.com/UniswapProtocol

Forum: https://gov.uniswap.org/

Discord: https://discord.com/invite/XErMcTq

7. How is the applying collateral type currently used?

UNI-V2-DAI-USDT LP tokens allow users to deposit equal values of the two constituent assets and earn trading fees proportional to their liquidity provided.

8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?

Don’t really feel qualified to comment on the legalities of UNI-V2 tokens but from relevant collateral apps:

9. Where does exchange for the asset occur?

UNI-V2-DAI-USDT can be exchanged for its underlying constituents permissionlessly via the Uniswap v2 contracts and front end UI. DAI and USDT are traded on a wide variety of decentralized and centralized exchange venues.

10. (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.

I am not aware of any publicly available legal opinions addressing the project or token’s regulatory standing.

12. (Optional) List any possible oracle data sources for the proposed Collateral type.

UNI-V2-DAI-USDT value can be determined based on the value of underlying assets.

The existing USDT oracle can likely be used to determine the value of USDT within the pair. MIP10c3-SP6 Proposal: USDTUSD Oracle (Collateral Onboarding Oracle Assessment)

13. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.

n/a

Disclaimer
I’ve used most of the information provided previously by @monet-supply on MIP6 applications for other collaterals and @smaugho

6 Likes

My main concern is the inclusion of USDT, granted is the main SC and is one of the biggest assets of aave for example but if a crack down is happening for SC I believe USDT to be first in line, that would have implications for the whole ecosystem but I don’t see the need to add additional risk to our collateral portfolio, specially in relation to the fees we would be getting (already happened with the vault which was not used) USDC in comparison is far less riskier and liquidity currently doesn’t add much (in respect to the uni pool)

4 Likes

I do think this is a valid concern and I do think people should take this into consideration when thinking about whether or not to greenlight.

I don’t know that I totally agree with the fact that USDC is “far less risky” however. The fist thing to consider there is the DAO’s total exposure to USDC ATM. Currently at about $500MM. That is pretty much the entire MKR marketcap, so if we are ever unable to liquidate our USDC holdings for some reasonable fraction of their current value we could be in real trouble.

As far as the regulatory concerns go. If there is a stablecoin “crackdown” coming I would doubt that USDC manages to come out unscathed in that environment, so based on that I would argue that the regulatory risks already exist and in a big way and that increasing our exposure by a few million through USDT-DAI doesn’t change things much because it is already so large nominally.

On the flip side of this though the liquidity yield is ~1000 bps higher than the yield for DAI-ETH. Based on that i would think a potential DAI-USDT vault could be able to charge significantly higher SF and help grow on-chain liquidity in that pair.

1 Like