Overview
Chaos Labs supports listing slisBNB on Aave V3 BNB Chain as part of the community’s strategy to increase the LST/LRT offerings supported by Aave. Below is our analysis and initial risk parameter recommendations.
Note: The following analysis is conducted solely from a market risk viewpoint, excluding centralization and third-party risk considerations.
Liquidity and Market Cap
slisBNB currently has a market cap of 300K BNB, with an average daily trading volume over the past 180 days of $1.6M. Its on-chain DEX liquidity is split roughly evenly between Thena and PancakeSwap.
slisBNB / BNB Volatility
Relative to BNB, and over the last 180 days, slisBNB has an annualized volatility of 8.6%. However, its peg volatility has improved significantly, falling to 3.7% measured over the last 30 days.
Liquidation Threshold
Considering the volatility and the correlation of slisBNB to BNB, we recommend setting the LT to 60% and the LTV to 55%
E-mode
While peg stability has improved significantly, we do not recommend including it in E-Mode at this time. However, we will reevaluate this recommendation as a longer price history is generated. Additionally, we have observed relatively limited demand for leveraged BNB yield strategies given its relatively low staking reward rate.
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 liquidity of slisBNB, we recommend a 7.5% Liquidation Bonus and a supply cap of 20,000 slisBNB.
Based on our observations, the utilization rate for LSTs has been low. Therefore, we recommend a conservative borrow cap of 2,000 slisBNB. However, if demand and utilization significantly increase at any point, we will reassess the caps according to observed utilization patterns.
Recommendations
Following the above analysis, we recommend the following parameter settings:
slisBNB (BNB Chain)
| Parameter | Value |
|---|---|
| Isolation Mode | No |
| Borrowable | Yes |
| Borrowable in Isolation | No |
| Collateral Enabled | Yes |
| E-Mode Category | None |
| Supply Cap | 20,000 |
| Borrow Cap | 2,000 |
| Debt Ceiling | - |
| LTV | 55% |
| LT | 60% |
| Liquidation Bonus | 7.50% |
| Liquidation Protocol Fee | 10.00% |
| Variable Base | 0.0% |
| Variable Slope1 | 7.00% |
| Variable Slope2 | 300.00% |
| Uoptimal | 45.00% |
| Reserve Factor | 15.00% |
| Stable Borrowing | Disabled |
| Flashloanable | Yes |
| Siloed Borrowing | No |