Add wUSDM as collateral on steakUSDC and steakUSDT

Vaults SteakHouse Financial
1

This proposal seeks to whitelist wUSDM (Mountain Protocol) as collateral on two of our stablecoin Metamorpho vaults on Mainnet, namely Steakhouse USDC and Steakhouse USDT. Our economic and legal overview on Mountain Protocol can be found here.

Introduction

USDM is an ERC-20 yield-bearing stablecoin which is predominantly backed by short-term US treasuries. It is issued by Mountain Protocol Limited, fully licensed by the Bermuda Monetary Authority (BMA) as a digital asset issuer and custodian. wUSDM is an ERC-4626 wrapper for USDM that accrues value via price increase, rather than a rebased notional amount.

The Steakhouse USDC and USDT vaults aim to optimize yields by lending the stables against blue chip crypto and real world asset (RWA) collateral markets, depending on market conditions. We believe wUSDM, with its native yield of 5% currently, is well-positioned to serve as an ideal RWA collateral for the “dual engine” strategy.

wUSDM Analysis

Mountain Protocol was awarded a full digital license by the Bermuda Monetary Authority on July 24th, 2024 after a year on a M, “limited period”, license. This can be checked on BMA website.

Llama risk also provided a risk review here. S&P Global issued a ranking 3 “adequate” with a negative adjustment from 2 “strong” due to the on-chain liquidity, lack of track record and reliance on less established third parties. The use of BUIDL of BlackRock and the F license are making us guess the current ranking would be closer to 2 .Bluechip assigned a B+ rating which puts USDM on par with USDC and much above USDT. Our economic and legal overview on Mountain Protocol can be found here. For those reasons, we consider the wUSDM addition to steakUSDC and steakUSDT is within the expected risk appetite of the users.

Implementations Details

As both USDM (the collateral) and USDC/USDT (the loan asset) are in the same currency, (USD), we are not using oracle’s price for their price deviations versus the USD. They are highly correlated and a temporary price deviation on secondary markets or a primary market freeze will only lead to the accrual of interest. We are using a LLTV of 96.5% which is assuming no capacity for instant redemption and potential delays can happen. This consideration is similar for the wstETH/ETH market where stETH is considered equal to ETH.

Parameters

Next Steps

We will add wUSDM as collateral to steakUSDC and steakUSDT. Please feel free to comment or ask any questions in this thread or via DMs.

As always, steakUSDC and steakUSDT holders will be able to veto any change using the Aragon guardian over the next 7 days. Vault depositors can create a vote to revoke this change on the Aragon UI here for steakUSDC and here for steakUSDT.