[ARFC] Add FXS to Ethereum V3


Chaos Labs supports listing FXS in Isolation Mode. Following is our analysis and risk parameter recommendations for the initial listing.

Liquidity and Market Cap

When analyzing market cap and trading volumes of assets for listing, we look at data from the past 180 days. The average market cap of FXS over the past 180 days was ~$480M, and the average daily trading volume was ~$19.5M (CeFi & DeFi).


Liquidation Threshold

Analyzing FXS price volatility over the past, we observed daily annualized volatility of 93.49% and 30-day annualized volatility of 47.26%. Considering this volatility, we recommend launching with an LT of 60%.

We support listing FXS as borrowable under reasonable limits of supply and borrow caps, as we do not observe a significant risk to the protocol by allowing to borrow the asset.


Debt Ceiling

Following Chaos Labs’ Isolation Mode Methodology, we recommend an initial debt ceiling of $4M. Under the methodology for Isolation Mode, we consider two levels of probabilities for extreme price drops - Medium-High and High. We estimate the probability of an extreme price drop for FXS as High.

Supply Cap, Borrow Cap, and Liquidation Bonus

Following Chaos Labs’ approach to initial supply caps, we propose setting the Supply Cap at 2x the liquidity available under the Liquidation Penalty price impact.

Given the concentrated liquidity of FXS we recommend a 10% Liquidation Bonus and a derived supply cap of 800,000 FXS, and a borrow cap of 500,000 FXS.


We support the recommendations in the post for the Reserve Factor, Liquidation Protocol Fee, and Interest Rate curves.

Following the above analysis, we recommend listing FXS with the following parameter settings:

Parameter Value
Isolation Mode Yes
Borrowable Yes
Collateral Enabled Yes
Supply Cap (FXS) 800,000
Borrow Cap (FXS) 500,000
Debt Ceiling $4M
LTV 50.00%
LT 60.00%
Liquidation Bonus 10.00%
Liquidation Protocol Fee 10.00%
Reserve Factor 20.00%
Variable Base 0.00%
Variable Slope1 9.00%
Variable Slope2 300.00%
Uoptimal 45.00%
Stable Borrowing Disabled
Stable Slope1 13.00%
Stable Slope2 300.00%
Base Stable Rate Offset 3.00%
Stable Rate Excess Offset 5.00%
Optimal Stable To Total Debt Ratio 20.00%
Flahloanable Yes
Siloed Borrowing No
Borrowed in Isolation No