Last week, the process of opening the XCM channels with Parallel was started as a first step to create additional DeFi use cases for iBTC, such as borrowing and lending. A prerequisite for money markets, and other interesting use cases, is to have enough iBTC liquidity on the Parallel chain.
Hence, the next step is to create a new iBTC pool on Parallel. Once enough liquidity is built up, we plan to add iBTC as borrowing collateral to the Parallel Money Market later on, once we identify and meet the requirements.
To ensure Parallel users can easily mint and move iBTC over via XCM, INTR needs to be available on the Parallel chain.
Decision to be made: which asset does the Interlay community want iBTC and INTR to be paired with?
As usual, there are a few factors to consider, including liquidity, impermanent loss risk, and diversification of integrations. Please keep in mind that in this particular case, the main goal is to create enough liquidity for liquidations to enable iBTC as collateral for borrowing on Parallel money market. The degree of liquidity in the pool will determine iBTC liquidation capacity which is the single biggest factor for Parallel to calibrate the supply cap of iBTC as collateral.
You can find the top liquid assets on Parallel here: https://analytics.parallel.fi/amm
This poll suggests listing one of the following pairs:
iBTC options
(1) iBTC/sDOT
- Pros: Most liquid token on Parallel, additional yield from liquid staking
- Cons: Protocol risk, risk of sDOT depegging from DOT, sDOT yield generation creates ~1% IL p.a. (given constant iBTC price)
(2) iBTC/DOT
- Pros: Polkadot native (no bridging or protocol risk), 2nd most liquid token on Parallel, highest availability in the Polkadot ecosystem (measured by market cap)
- Cons: Forgo staking yield when provisioning DOT for liquidity (compared to sDOT)
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INTR options
(3) INTR/sDOT
- Pros: Most liquid token on Parallel, additional yield from liquid staking
- Cons: Protocol risk, risk of sDOT depegging from DOT, sDOT yield generation creates ~1% IL p.a. (given constant iBTC price)
(4) INTR/DOT
- Pros: Polkadot native (no bridging or protocol risk), 2nd most liquid token on Parallel, highest availability in the Polkadot ecosystem (measured by market cap)
- Cons: Forgo staking yield when provisioning DOT for liquidity (compared to sDOT)
(5) INTR/PARA
- Pros: Polkadot native (no bridging risk)
- Cons: Less liquidity than DOT
