Introduction
Mars Protocol was a early Terra project designed for lending but was unfortunately affected by the capitulation event within LUNC formerly known as LUNA. (Article Here.)
Mars has since then become more popular and widely used for various cryptocurrencies and is a viable and successful protocol for operations and collateralized DEFI loans.
Purpose
The aim of this proposal is to approve community consensus for the L1 or L2 developers to add LUNC in their roadmap, for it to be listed within Mars Protcol’s Red Bank, and to speak with the developers of the Red Bank for additional information to procure a listing. This is mutually beneficial for both blockchains and especially so for LUNC because LUNC is deflationary so every time someone loans LUNC it decreases the supply through burns while also introducing interest rate models that create buy in incentivizations and/or acquisitions through swaps (Also deflationary).
Motivation
The listing of LUNC on the Mars Protocol platform would offer an additional use case for LUNC holders and potentially attract more users to both the Mars and Terra Ecosystems. Additionally, it would provide LUNC holders with the opportunity to participate in DeFi lending and borrowing activities on Mars Protocol through the Red Bank.
ROUGH AVERAGE DATA REQUISITES SINCE MARCH 2023
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Daily 95% Conditional Value-at-Risk (CVaR, 365-days):Based on these quantitative metrics, in the next section, we propose the LTV and other associated risk parameters. 18.59%
Maximum intraday drawdown (90-day) 45.42%
Median 24hr volume (365-day, logarithm): median 24hr volume over the last 365 days.
$1,710,000,000
Median 24hr market capitalization (7-day average, 90-days):
$97,498,212,000,000
Average high-low percent quoted spread (30-day): 5.57%
Amihud’s illiquidity measure (90-day): 24.22%
Initial Deposit Cap Request: 25,000,000,000 LUNC (25Billion)
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Tokenomics Involved
The amount of LUNC tokens deposited within the Red Bank reduces the circulating supply by the deposit cap amount (which can be modified for higher deposits later). While LUNC tokens are deposited within the Red Bank, holders may accrue a passive interest yield in MARS tokens (variable APRS but typically around 20%-ish). When someone is interested in a DEFI loan and takes LUNC tokens from the Red Bank, they increase the total volume of trades involved on the chain (increasing burned LUNC tokens) and also must pay interest accrued on the loan in the form of LUNC (users may have to purchase more LUNC tokens to pay off interest on said loans, therefore increasing the price of the LUNC in question)
Project Needs: Commercially done external audit, Bug bounty Program (and very few lines of code for the Red Bank Module), and a few other negligible attributes.
(Listings must adhere to the MARS RISK FRAMEWORK.)
Ideally by principle if multiple chains/protcols agree to list LUNC as loanable assets (or just the Red Bank within Mars Protocol for this proposal), the circulating supply could potentially be cut down by tens of billions at a minimum and perhaps even greater with additional future deposit cap increases. By reducing the circulating supply it allows easier price movements upwards while also incentivizing holders of LUNC with other mediums of wealth accumulation. Increased volume may also reduce the total supply alongside the circulating supply as a cross symptom combo.
The developers may need to use a community spend proposal to hire an audit team to acquire a listing within the Red Bank and to assure LUNC meets the requirements for deposits and deposit cap increases.
TLDR:
NET BENEFITS
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- Increased burns
- Increased utility use cases
- Increased choices for interest rate models for LUNC holders
- Decreased Circulating Supply
- Decreased Total Supply
- Increased swaps for LUNC tokens due to being contractable within the Red Bank (Also increasing Burns)
- Increased Liquidity
- Reduced Negative Volatility
- Long Term Positive Price movement
- Increased Yield For Those Currently Staked With LUNC Validators On Chain due to deposits moving within the Red Bank to accrue interest rather than draining the Oracle Rewards Pool. (Due to the structure of how staking yield is payed)
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Other Credit Protocols Also Exist Within The Cosmos such as KAVA and UMEE which may also be considered upon for future reference and deposit listings!
Additionally Please feel free to vote at this StrawPoll and show community intent towards this proposal. PRE-VOTE POLL HERE
If you support this proposal vote YES.
If you do not support this proposal vote NO.
If you do not care about this proposal vote ABSTAIN.
If you vehemently disagree with this proposal vote NO WITH VETO.
Please Also Feel Free To Comment Below Your Thoughts/Opinions.
