Steakhouse supports this proposal to onboard SOL as a backing asset for USDe given the maturation of the asset and its derivative markets, as well as the significant growth in liquidity and ubiquity of the SOL token. However, we agree with the other committee members in regards to conducting a deeper analysis to assess:
Historical Volatility:
- Historical funding rate volatility, which have had a much larger standard deviation of returns relative to BTC and ETH and how to best mitigate extreme negative volatility moves
Exit Strategy:
- An exit strategy should be developed in the event market conditions materially and persistently deteriorate
- Given the history of network outages, an understanding as to how an extended period of network downtime may affect USDe, particularly in times of market stress.
LST Risk:
- Appropriateness and scale in consideration of using bbSOL and bnSOL as LSTs, given the structural differences in the products both technically and legally, and relative newness (both launched in September)
Liquidity:
- Spot and perp liquidity, as well as the minimum level of open interest required to begin and continue trading on an exchange. Currently only Binance and Bybit are at a scale that can handle the proposed volume, which could lead to further concentration risk given the significant amount of assets held on Binance already.
Additionally, while the proposal recommends a certain allocation range as a percentage of OI, we believe it would be useful to set hard limits and timetables with respect to the exposure to SOL, so that the community and users can have certain expectations of the evolving underlying risk profile.