Asset Listing
The Solera protocol facilitates the supply and borrowing of digital assets via liquidity pools. When users supply assets, they receive tokens that represent both the underlying assets and the accumulated yield. Loans are secured by collateral to protect against default. While Solera is not directly responsible for the liquidity or activity of any individual pool, several key considerations are addressed by core contributors before listing new assets.
For V1, the following principles guide asset listings:
Gas Costs: Adding new tokens increases transaction gas costs due to the complexity introduced in smart contracts.
Insolvency Risk: Introducing volatile tokens as collateral raises the protocol’s insolvency risk. Borrowed tokens represent liabilities, and collateral represents the protocol’s assets. Since most borrows are in stablecoins while collateral tends to be volatile assets, only assets with strong risk profiles are supported as collateral.
Mitigating Risk: V1 is designed to manage insolvency risk when listing higher-risk tokens. Assets that present centralization risks or oracle manipulation risks may be restricted to single-asset borrowing to limit exposure.
Non-Collateralized Tokens: Tokens listed for supply and borrowing, but not for collateralization, pose less risk. These must always be significantly overcollateralized to maintain protocol solvency. For example, if a user supplies a token but it is not permitted as collateral, it must be borrowed against a less risky asset.
Diversification: Supporting a diverse range of liquidity sources helps mitigate risk through diversification.
When onboarding a new token, it is essential that the Solera community conducts a comprehensive analysis to ensure the asset provides value while managing potential risks. Only tokens with strong backing and a robust community should be considered. The asset risk methodology provides a framework to evaluate token risks and calibrate parameters accordingly.
Management of New Market Listings
Initially, the introduction of new tokens into the Solera ecosystem will be managed by the core team. Over time, this responsibility will be handed over to the Asset Listing Governance Team, guided by Solera token holders. Additional details regarding this process will be shared in the future.
Listing requirements for Isolated Collateral Market will be more lenient than for main market collateral, and may eventually become permissionless.
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