Add Collateral EIGEN to USDC Market on Mainnet

Proposals
1

Introduction

Eigen Foundation proposes listing EIGEN tokens as collateral on USDC markets on Mainnet. This would allow users to leverage their EIGEN tokens, borrowing USDC to participate in other DeFi activities. This move is expected to drive borrowing activity and increase user engagement within the EigenLayer ecosystem.

Given the significant demand on EigenLayer, we anticipate that this addition will provide opportunities for Compound users to borrow against their EIGEN to unlock liquidity, or alternatively to borrow EIGEN against other collateral allowing them to stake it in the Eigenlayer ecosystem to earn rewards.

Type: Collateral deployment

Author: Eigen Foundation

Motivation

The EIGEN token is a universal intersubjective work token designed for EigenLayer, enabling security for various digital tasks that are not just objectively verifiable but also intersubjectively attributable. Unlike traditional work tokens that are tied to one specific digital task or objective faults (verifiable on-chain), EIGEN addresses a broader category of faults where multiple external observers agree on whether the task was performed correctly. This expands the range of tasks that can be securely managed on a blockchain.

EIGEN tokens are used for:

  • Staking for intersubjective faults on the EigenLayer platform.

  • Performing validation tasks across various Actively Validated Services (AVS).

  • Incentivizing and penalizing operators based on their performance.

By listing EIGEN as collateral, we aim to create new opportunities for Compound users to engage with this emerging staking ecosystem, while expanding EIGEN’s liquidity.

Important Links

Next Steps

We invite the community to give their feedback and recommendations for the asset.

4 Likes
2

[I’m a voter a part of Blockchain at Berkeley but my views do not represent the views of the club]

EIGEN has a huge market cap and it only makes sense for Compound to include it. Due to volatility, would make sense to use more conservative parameters. Also given Aave DAO’s reluctance to include it, it is a competitive advantage for Compound to.

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[Gauntlet] EIGEN Asset Listing on Compound V3 Ethereum WETH markets

Noting that the forum request specifically proposes adding EIGEN to the USDC Market on Mainnet, Gauntlet recommends listing on Mainnet’s WETH market. If the community opts to list EIGEN on Compound V3 WETH markets on Ethereum, Gauntlet recommends the following risk parameters.

Ethereum WETH Comet

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
EIGEN 83% 88% 10% 1.1M

Analysis

Description

The EIGEN token is used within the EigenLayer ecosystem for staking to secure decentralized services, earning rewards through programmatic incentives, and resolving intersubjective faults via community-driven forking. It incentivizes participation, funds ecosystem growth, and can also be utilized in DeFi applications.

The EigenLayer ecosystem is a re-staking protocol built on Ethereum, designed to extend the utility of staked ETH and enhance decentralized services. It allows users to “re-stake” their ETH or other staking tokens to secure additional services beyond Ethereum’s core consensus, creating a shared security model.

Restaking Protocol TVL Rankings

Restaking Rankings on DeFiLlama
Restaking Rankings on DeFiLlama2034Ă—598 83.9 KB

Total Supply:

Total Supply: 1,703,257,340 EIGEN

Source: etherscan

Liquidity Sources

The following table summarizes the liquidity sources for EIGEN across various decentralized exchanges (DEXs) on Ethereum:

pool_name pool_type pool_url pool_tvl_usd volume_24h_usd
EIGEN / WETH 0.3% uniswap_v3 Link $9.24M $2.02M
USDC / EIGEN 0.3% uniswap_v3 Link $443.34K $65.62
USDC / EIGEN 1% uniswap_v3 Link $126.73K $6.19K

Volatility Analysis

EIGEN –> WETH

Metric Value
Min Price Change Log -8.41%
Max Price Change Log 11.37%
Annualized Daily Log Volatility 69.61%
Annualized 30D Log Volatility 60.62%

Supply Cap

~$1m EIGEN would cause ~5% slippage while about $3.2M EIGEN lead to ~25% slippage.

Considering the liquidity available, we recommend setting a supply cap of 1.1M EIGEN (~$3M) for WETH markets to gauge market demand.

5% Slippage

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image628Ă—569 26 KB

25% Slippage

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image656Ă—583 26.4 KB

Liquidation Factor (LF), Collateral Factor (CF) and Liquidation Penalty (LP)

Gauntlet recommends setting the Liquidation Factor at 88%, the Collateral Factor at 83% and the Liquidation Penalty at 10%.

Next Steps

We welcome community feedback on the proposed risk parameters.

Note: The data provided in this document is accurate as of the publication date. Market conditions and liquidity levels may change, and it is advisable to regularly review these parameters to ensure they remain appropriate.

1 Like