Having been a long time lender on BendDAO as well as other NFT lending protocols (like Nftfi, Arcade, Pwn etc) I have an improvement that I think would have a really positive impact on the protocol, if enacted.
Many people like borrowing ETH against their NFTs. Most NFTs are priced in ETH, so it’s a natural asset to borrow against. However, there are a lot of borrowers who prefer stablecoins, so I propose adding a vault of either DAI or USDC, that people can choose to borrow from instead of the ETH vault.
I think ultimately, it would be highly utilized, and would bring additional TVL to the protocol, while also attracting more lenders, and potentially new borrowers.
As you can see from the below examples, there are lots of people electing to borrow stablecoins instead of ETH against their NFT assets. These are just a few examples but there are many more.
I also think seeding it with a similar amount of rewards to the ETH vault would be great to attract initial liquidity.
Add USDC or DAI Vault for lenders / borrowers to utilize
Use same risk parameters as the ETH vault, calculate floor / liquidation prices in stablecoins as well so there’s no additional risk for lenders
Add BEND rewards to bootstrap the vault, and adjust as needed based on APR/APY for people lendingto /borrowing from it
Ultimately, these are just my thoughts, but would be eager to get feedback or additional thoughts but I’d like to open it up for discussion and hopefully get it implemented in the near future.
Hey! Definitely supportive of widening the tokens supported for borrowers to access apart from just ETH, especially in stables.
As an initial venture, I’d recommend stablecoins - USDC, USDT and DAI given its stability and clear demand. While Paraspace implements the similar parameters for these and ETH, I believe there is a case to reduce the variable rates for the slopes for these stablecoins and encourage borrowing. This can be seen with AAVE’s tiered model.
Currently, the idle capital for the ETH pools are also sitting about 50% and these are under-utilized by the borrowers.
As a starter, I would suggest a lower interest rate for stables can be considered, given its stability and ease of conversion even in times of crises.
With the other parameters the same,
Slope 1 : 6% (< optimal)
to incentivise more borrowing when utilisation is low (in normal market conditions)
can be reduced since borrow is not overly incentivised atm from the ~50% usage of pools
Slope 2 : 80% (> optimal) => ideally reduce to 60% in the future based on Paraspace’s guide
this is also less than the 100% imposed on ETH for BendDAO
mitigate 100% utilization
can be reduced since theres a shorter auction period and users are likely to be overly sensitive with this timeframe to interest rate shocks.
I believe this also provides a good testbed for BendDAO to experiment with more competitive parameters and interest rates, maximising capital efficiency. This also reduces the need for an overt usage of $BEND rewards and provide more targeted bootstrapping to particular collections/pools