APR Oracle is the oracle that reads and calculates the 7-day average borrowing rate of the stablecoin on Venus. The borrowing rate is basically used as reference for the interest earned for BISHOP, or as the cost of owning leverage with ROOK. Currently, the stablecoin that the APR oracle benchmark against is the BUSD on Venus. With the imminent support for BUSD wavering, we propose to change the underlying stablecoin benchmark of the APR oracle from BUSD to USDC on the BNB Chain*.
*The stablecoin benchmark that APR oracle refers to on Ethereum is already in USDC and is not affected by this proposal.
In June 2022 when Tranchess V2 launched, BUSD pool on Venus was selected and its borrowing rate was used to calculate the interest rate (cost of borrowing) between BISHOP and ROOK that will be used within the Tranchess ecosystem. We compared various parameters such as size, liquidity level, and adoption rate on BNB Chain among several stablecoins and chose BUSD as the proper fit.
Since Paxos released its statement on BUSD in February, we’ve been closely monitoring the liquidity level of BUSD on Venus and its usages within the overall BNB Chain ecosystem. After Chaos Labs’ proposal on Venus governance on halting the BUSD pool last week, the borrowing rate of BUSD on Venus has now reached an unhealthy level, which is neither practical nor sustainable for BISHOP and ROOK anymore to continue using it as a benchmark.
After careful consideration and evaluation of varied parameters, we propose to substitute BUSD with USDC as the stablecoin benchmark for our APR oracle. The suggestion is made based on the following rationale:
- USDC’s lending pool on Venus runs at a stable and ample liquidity level, which is essential in maintaining a fair and reasonable supply/borrow rate, crucial for our interest rate calculation and BISHOP/ROOK’s adoption.
- Based on historical performance, USDC runs a relatively lower depeg risk as a stablecoin.
Here is the timeline for the proposal:
- Voting is open from 14:00 UTC, September 5 to 12:00 UTC, September 7, 2023.
- If the proposal is approved, Tranchess will update the APR Oracle contract at 14:00 UTC, September 7, 2023.
- The current smart contract address: 0xA79ff9C3d94F4BD7e664415cBe62D076e81B7600
- Smart contract address for the new APR oracle, if proposal approved: 0x8424D933FbB73665E5a8880de63C7B1366a56EeD
- There’s a one-day timelock for the change to take effect.
- Updated interest rate will apply to BISHOP and ROOK post-update.
The ongoing deprecation of BUSD by Paxos and the general usages of it by BNB Chain ecosystem is leading to an increased liquidity risk. Changing the stablecoin source in which the ARP oracle uses for interest rate calculation protects holders of BISHOP and ROOK, thereby ensuring a long term sustainable and healthy ecosystem within Tranchess.
Changing from BUSD to USDC protects BISHOP and ROOK holders from any future risks that might happen due to BUSD’s deprecation.
USDC is not the best stablecoin to adopt in this scenario.
Please click here to vote on Snapshot.