Proposal to add stLuna as a Collateral asset

Lido proposes to add stLuna — Lido’s auto-compounded liquid staking derivative — as collateral for borrowing on Mirror Protocol.

Lido DAO is a sophisticated liquid staking provider that works on multiple platforms: Ethereum, Terra, and Solana. Polygon and Kusama are to come soon and even more are in development. Lido is in the strong position of being at the top-10 DeFi protocols by TVL.

stLuna is a token that represents staked Luna with staking rewards auto-compounding. bLuna works from March 2021 and an upgrade of Lido on Terra from bLuna-only to bLuna/stLuna was made in Dec 2021. During that time Lido on Terra showed itself a reliable solution. The code is open-sourced and was audited by OakSecurity and peer-reviewed by several Terra and Cosmos sophisticated developers.

Overall bLuna and stLuna liquidity is near $300M on Astroport atm (16 Feb 2022) which makes them the most liquid assets in the Terra ecosystem, excluding Luna and stable coins.

Would love to hear any feedback from the Mirror community.

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How does this benefit Mirror? Luna A liquid staking solution is already being integrated.

It’s a good thing for the protocol to have different types of collaterals. Those collaterals could be similar to each other but it doesn’t preclude adding the other after one is integrated already. stLuna is much bigger — 25% of staked Luna is staked with Lido at the moment, and it has huge liquidity. Adding stLuna as collateral will allow a lot of users to use their stLuna in Mirror protocol.

The differences (and advantages) of stLuna over bLuna come to mind with regards to this proposal. This information is already linked in the OP, but the link text doesn’t clue the reader that is the case.

It seems evident to me that regardless of whether the user intends to use/already uses Lido/stLuna/bLuna, the most consequential effect of this proposal is that (as explained in the link) stLuna increases decentralization¹ (and the Nakamoto coefficient) vs bLuna. Thus it’s use should be encouraged across the entire Terra ecosystem. IMO this is the main benefit of this proposal to the Terra community at large.

  1. this is especially true now that Lido is expanding their validator set significantly (adding 21 validators)
  2. disclosure: I’m part of and we are one of the onboarded validators to Lido.

Feel free to write the contracts, submit a gov poll, and the community can decide whether it is useful. You can even request community funds at any point via a poll to support this.

…that is if you actually believe this is in the best interest of Mirror and not just another “Hey, do a thing that tangentially benefits me” request.