Add market USDT on Polygon

Summary

Compound Growth program proposes launching USDT market on Polygon network.

Motivation

USDT on Polygon has a total supply of $841 Million [Source]. The Growth program is already pushing USDT Markets on ETH mainnet, Arbitrum and Optimism. Compound USDT market on Polygon opens up a huge market for Polygon ecosystem users to earn on their USDT holdings. This also helps the Compound protocol to attract more TVL and in turn generate more revenue.

Point of Contact: @bryancolligan @sharp

Proposed Collateral

We propose adding the following asset as collaterals for the market

  • Matic (MATIC)
  • Stader Matic (MATICx)
  • Wrapped Bitcoin (WBTC)
  • Staked Matic (stMATIC)
  • Wrapped Ether (WETH)

We invite the community to suggest and give inputs for any other collateral assets.

Relevant Documents and Links

Website: https://tether.to/

Twitter: https://twitter.com/Tether_to/

CoinMarketCap: Tether USDt price today, USDT to USD live price, marketcap and chart | CoinMarketCap

CoinGecko: Tether Price: USDT Live Price Chart, Market Cap & News Today | CoinGecko

PolygonScan: $1.00 | (PoS) Tether USD (USDT) Token Tracker | PolygonScan

Next Steps

USDT is the top token with the highest number of holders in the OP market. Standing at around 3.5M Users, it is way higher than the existing USDC.e token with 2M Users on the Polygon Network. Adding the market to Compound will provide an additional opportunity for the growth of the protocol.

We invite the community to consider this application for listing the USDT market and welcome suggestions in this direction.

Additionally, we look forward to the community to suggest

Collateral Factor

Reserve Factor

Borrowing Limit

4 Likes

I would love to see a USDT market on Polygon.

1 Like

[Gauntlet] Polygon v3 USDT Comet Initial Asset Listing Recommendations

Simple Summary

Gauntlet is excited for the community to add a USDT Comet to Polygon. We recommend the following initial parameter recommendations for the Polygon v3 USDT comet.

Risk Parameters

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
Matic 65% 80% 15% 5M ($3.5M)
MATICx 60% 70% 20% 2.6M ($2M)
WBTC 75% 85% 10% 90 ($5.6M)
stMATIC 60% 70% 20% 1.5M ($1.1M)
WETH 80% 85% 5% 2,000 ($6.1M)

Storefront Price Factor: 60%

Gauntlet recommends keeping the Store Front Price Factor at the same value as the Polygon v3 USDC.e Comet.

Target Reserves: 20,000,000

After Gauntlet’s forum post analyzing Target Reserves, Gauntlet recommends increasing the Target Reserves for this market based on historical reserve growth and our recent recommendation to increase Ethereum USDC Comet’s Target Reserves.

IR Curve Parameters

Gauntlet recommends the following IR parameters for USDT Comets:

IR Parameter Value
borrow per year interest rate base 0.015
borrow per year interest rate slope low 0.0833
borrow kink 0.9
borrow per year interest rate slope high 4.3
supply per year interest rate base 0
supply per year interest rate slope low 0.075
supply kink 0.9
supply per year interest rate slope high 3.6

The chart above demonstrates that the generation of Comet USDT reserves will be positive when utilization exceeds 73%.

Incentive Parameters

Our COMP rewards recommendations are designed to offer appealing distribution APRs when the comets are first launched and when supply caps are highly utilized.

Gauntlet is recommending higher supply rewards to incentivize a more significant inflow of supply tokens into the protocol. This is important in the early stages of protocol growth since USDT supply are required before borrowers can join. Daily COMP rewards are subject to change as TVL rises and the markets evolve.

USDT Comet Incentives

Daily COMP Supply Rewards Daily COMP Borrow Rewards
8 4

Assuming full usage of supply caps and current liquidation factors, the total borrowing power would be $14.91M.

Here’s a breakdown based on our assumptions:

  • Borrow Usage (80%): This leads to a borrowing volume of $11.9M.
  • Utilization (90%): Corresponding to a supply volume of $13.25M.

With the above utilization and the present Interest Rate curve:

  • Supply APR: 6.75%
  • Borrow APR: 9.00%

Given the current COMP price of $89:

  • Supply Distribution APR: 1.23%
  • Borrow Distribution APR: .69%

This results in the following Net APRs:

  • Net Supply APR: 7.98%
  • Net Borrow APR: 8.31%

The chart above illustrates the Distribution Annual Percentage Rates (APRs) across various supply levels, assuming a 90% utilization rate. It’s noteworthy that APRs exceeding 2% will persist until the market’s supply reaches $9M. These incentive distributions are strategically designed to accelerate the USDT Comet. The current projected net APRs are within reasonable ranges.

Next Steps

We welcome community feedback.

2 Likes

Looking forward to having USDT on Polygon!

1 Like

Hi Compounders. We are glad to inform you that Woof Software passed Polygon USDT market deployment to OpenZeppelin team for auditing. Looking forward to their feedback.