Summary
Add the tBTC2-long LlamaLend market with vault address 0xdfA525BD3A8e59d336EF725309F855250538c337, allowing users to mint reUSD and leverage supply to the market.
Set market with max 95% LTV, 5% liquidation fee, and 100m reUSD max borrow, consistent with previously onboarded markets.
Abstract
- Resupply has historically onboarded tokenized BTC markets and there is an opportunity to onboard additional markets within this category.
- tBTC2-long has successfully undergone a gauge vote to receive CRV emissions.
- In this post we will first present metrics showing the performance of this asset since its deployment.
- Finally, we explain the configuration of the tBTC2-long market and implications for users, including integrating protocols such as Resupply.
tBTC Performance
tBTC is a ERC-20 token that represents and is backed 1:1 by Bitcoin. The goal of tBTC is to enable users to access the value of their Bitcoin in the DeFi ecosystem while not requiring trust in a central third party.
LlamaRisk has conducted several evaluations of tBTC over the years that may testify to the rigorous commitment Threshold has had to security and decentralization of the product:
While it has historically been a marginal BTC token compared to custodial products WBTC and cbBTC, tBTC distinguishes itself as the most decentralized BTC offering that has demonstrated resiliency over four years in prod. A notable feature is the ability for users to mint/redeem tBTC directly onchain through the Threshold bridge network, whereas more prominent products require access to centralized exchanges or otherwise have permissioned access to mint/redeem.
Source: DefiLlama
Adoption of tBTC has been relatively slow over several years, although it has shown a positive trajectory that demonstrates consistent demand for decentralized alternatives. tBTC has a market cap of $480m, holding 4.65k BTC. Nevertheless, it remains a marginal BTC-derivative, making up a small portion of the sector.
Source: DefiLlama
Market Configuration
A tBTC market has existed since before Resupply launched. It was not included in the initial launch because it was an early version that did not support leverage. tBTC2-long was configured exactly the same as the previous market except for the inclusion of Odos leverage support.
Parameters
The following parameter set is used for the tBTC2-long market on LlamaLend:
| Parameter | Value |
|---|---|
| A | 75 |
| Fee | 0.6% |
| Loan Discount | 6.5% |
| Liquidation Discount | 3.5% |
| Min Rate | 0.1% |
| Max Rate | 70% |
This configuration is consistent with other BTC markets (i.e. WBTC), offering borrowers an exceptional 11x max leverage, 91% max LTV thanks to additional protection offered by the soft liquidation feature.
The interest rate model is set with a high enough max rate to ensure liquidity for lenders in normal market conditions. In case tBTC were to experience exceptional borrow demand, the rates can be adjusted with a one week delay on execution. It is worth noting that, as with all lending markets, there may be extraordinary conditions, including critical failures in the underlying collateral, that may lead to temporary or permanent market illiquidity. Such conditions may adversely affect reUSD holders, Resupply stakeholders, and depositors to the Insurance Pool.
LlamaRisk actively monitors LlamaLend markets and works to ensure proper market operation that protects lenders to these markets.
Oracle
The oracle used in LlamaLend markets is a critical dependency and typically employs one or more Curve pool price oracles to derive a market price for the underlying. The tBTC2-long oracle contract can be found here.
This oracle uses the crvUSD/wstETH/tBTC CurveTricryptoOptimizedWETH pool implementation with current TVL of $5.2m. This TVL is sufficient to ensure a reliable price oracle, and the EMA pricing protects against price manipulation attempts.
The oracle also uses the aggregated USD price of crvUSD. Using the aggregated price of crvUSD instead of crvUSD helps mitigate the risk of borrower liquidation in case crvUSD experiences a short-term upward depeg.