Addition of Stader's ETHx as a collateral to Radiant's Ethereum market

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Abstract

Add Stader’s ETHx as a collateral to Radiant’s Ethereum market

References/Useful links

Rationale & Motivation

LSTs are the perfect use case for money markets in general which is quite evident from all the success the space has seen with other LSTs even giving rise to several new protocols in the process. Leveraged staking loops is one of the top strategies used and with something like that inbuilt into Radiant makes it all the more powerful and puts it head and shoulders above the rest

From Radiant’s perspective any new asset is a source of additional revenue and expands the ecosystem as a whole. And a relatively risk free ETH correlated asset should be a straightforward proposition

Specifications

Project Summary

Stader is a non-custodial liquid staking platform with $500Mn+ TVL across 7 PoS blockchains (Ethereum, Polygon, Bnb, Hedera…) with Ethereum being the latest to launch in early July.

ETHx is created to improve accessibility & support decentralization of Ethereum by allowing anyone to spin up a validator with just a 4 ETH bond; the lowest in the industry and 80% lower than solo staking. This coupled with the unique multipool architecture of permissionless & permissioned Node operators furthers decentralization without compromising scalability. Users can deposit any amount of ETH with Stader and receive proportionate ETHx, an ERC-20 C-token which represents staked ETH; that appreciates in value over time due to the staking rewards and is represented in the exchange rate

ETHx is currently at $350M TVL (100K ETH) across 2,400+ validators spread over 200+ Node Operators who bonded over $14M to cover for slashing/penalties. In terms of liquidity depth, ETHx is at $35M across Curve ($33M) & Uniswap ($2M) which translates to a 6K ETHx swap at 8% slippage

Besides DeXs, ETHx is also live on Pendle, Ledger & OKX with Lybra, AAVE & Compound in the final stages of integration

Other stats (as of 2024-01-23)

Risks

The introduction of ETHx provides an opportunity for diversification and broadening the collateral base while mitigating concentration risks. However, we do acknowledge the concerns around the potential risks associated with ETHx too. They can be broadly segmented into three buckets and are addressed as such

1. Security

While Stader might be new to Ethereum, we have built LSTs on 6 chains prior to this and security has always been paramount for Stader. All our smart contracts across every chain have been audited at least twice. The ETHx smart contract in particular has been triple audited by leading smart contract security partners Sigma Prime, Halborn & Code4rena; complete with Forta on-chain monitoring and a $1Mn bug bounty on Immunefi

2. Governance

Stader’s governance is led by the Stader DAO - a wide variety of $SD holders who participate in key decisions pertaining to the protocol. Here are the Stader Governance Forum & Snapshot

ETHx has an Oracle Node Operator Genesis Committee of 7 distinguished community members composed of top validators and esteemed Ethereum community members. You can learn more about the ETHx ONO committee here

3. Centralisation

Stader is a non-custodial & decentralized liquid staking solution based on DAO governance. $SD is Stader’s native governance token. ETHx is based on the foundation of decentralizing Ethereum with permissionless node operators getting the majority of the TVL (currently at ~90%).

The ETHx contract upgrades are managed by Admin time-lock contract with a 6 on 9 Multi sig (2 Stader members and 7 external members) as the proposer. Composition of the committee can be found here

You can learn more about how Stader envisions embracing the path of decentralization here

4. Redemptions

ETHx, like all of Stader’s prior LSTs went live with redemptions enabled from Day 1. So, the ETH is not locked and can always be redeemed by unstaking & withdrawing on Stader Dapp anytime. Withdrawal requests are processed either from the deposit pool or by exiting validators. Users can also swap their ETHx for ETH on any of the DEXs or aggregators for instant liquidity

Steps to Implement

  • Chainlink Integration: Here is the ETHx Chainlink feed which will provide accurate and real-time exchange rate data for the token
  • Smart Contract Implementation: Based on the defined parameters, the Radiant team will implement the necessary updates to enable the integration of ETHx as a collateral and borrow market with parameters as laid out above. This implementation will involve coding and testing the smart contracts to ensure their functionality and security
  • User Interface Update: The Radiant Capital user interface will be updated to reflect the addition of ETHx as a collateral and borrow market. This includes providing users with the option to select ETHx as collateral and borrow assets, as well as displaying relevant information such as ETHx exchange rates, available loan options, and associated risks

Timeline

Integration is expected to occur swiftly, subject to the following stages:

  • Local Testing: The Radiant team will conduct thorough testing of the implementation in a local environment to ensure its functionality, security, and compatibility with the Ethereum ecosystem
  • Staging: Following Chainlink Feed integration, the implementation will proceed to a staging phase, where further testing to verify the integrity and functionality of the ETHx collateral and borrow market will take place

Overall Cost

Minimal

Parameters

While the risk teams would do their assessment and suggest the parameters, Stader proposes the following parameters to kick-start the conversation

Max LTV: 75%

Liquidation Threshold: 80%

Liquidation penalty: 15%

Your support and consideration of our proposal is greatly appreciated! We look forward to hearing from you soon and happy to provide additional resources and support to the community if needed