Support DEGEN on Seamless as Supply & Borrow Market

Project and Asset Integrations
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Summary

Recently via SIP 8, referencing an earlier Discourse Post, DEGEN was added to Seamless as a Single Sided Market. Within hours of launch, caps were reached, and demand was clear from both the Seamless and DEGEN community alike.

When SIP 8 was proposed, there was no current DEGEN Price Feed Available to facilitate borrowing capabilities and therefore, DEGEN opened initially as a Single Sided Supply Market. Now that there has been a published Price Feed from Chainlink, this post seeks to open DEGEN as a fully fledged lending and borrowing market on Seamless.

Context & Motivation

As the leading Base-native liquidity market, Seamless should consider listing more Base-native Assets, including DEGEN which has become a widely held utility token of Base-native users. DEGEN, the popular tipping token of Farcaster users, has over 460,000 holders and liquidity of over $14m on Uniswap (Base).

Since DEGEN opened on Seamless Supply Caps were reached within hours of launch, and even after caps were raised, more supply rolled in from the Seamless and DEGEN communities. Given its popularity and demand, opening up DEGEN as a fully fledged lending and borrowing platform is a next step now that a Chainlink Price Feed exists.

Given DEGEN holders are looking for more utility for their token, borrowing against their DEGEN presents unique liquidity use cases to provide holders more ways to gain access to other crypto assets.

Specifications

  1. What is the link between the author of the AIP and the Asset?

Seamless Community Contributor

  1. Provide a brief high-level overview of the project and the token

DEGEN: DEGEN is the rapidly growing tipping token used to power the Farcaster community. Recently, DEGEN has also expanded to be used as the native gas token of Degen Chain, an L3 built on Base.

  1. Explain positioning of the token in the Seamless ecosystem. Why would it be a good borrow or collateral asset?

Due to answers above, there is clear demand for DEGEN on Seamless given that supply caps were maxxed out shortly after the single sided supply market opened. By opening borrowing capabilities, users could benefit from a number of use cases including but not limited to:

  • Multiplying a user’s DEGEN position. Lend DEGEN for stablecoins to buy more DEGEN, thereby increasing your overall DEGEN exposure.
  • Borrow some stables for LPing. Lend DEGEN to borrow stablecoins (and keep those stablecoins or use them to purchase ETH), then use both assets to provide liquidity on platforms like Aerodrome or Uniswap where DEGEN has liquidity pools.
  • Diversify your holdings. Borrow stablecoins against your DEGEN holdings to invest in other crypto assets on Base (buy and hold). This strategy allows you to maintain exposure to multiple memes while holding onto your DEGEN position.
  1. How is the asset currently used?

DEGEN is used as a tipping token for Farcaster and gas token for Degen Chain.

  1. Market Data (Market Cap/FDV, 24h Volume, Volatility, Exchanges, Maturity)

DEGEN: FDV of $835M, $25m in 24h volume, Exchanges: Bybit, Gate, Uni v3, Aerodrome

  1. Contracts date of deployments, number of transactions, number of holder for tokens

DEGEN: Date of deployment (January 7, 2024), Number of transactions (6,309,805), Number of holders (462,348)

References

Projects - https://www.degen.tips/
Github - Degen · GitHub
Smart contracts - DEGEN
Oracles - DEGEN/USD
Twitter - x.com

Next Steps

Would appreciate risk analysis on Borrow Caps from Chaos Labs and would also be great to learn from the DEGEN team on any co-incentives to pair with the opening of this market. If co-incentives are on the table, would need governance to ultimately allow for DEGEN to be emitted to various markets on Seamless Protocol.

If there is general buy-in, can look to move this to an onchain vote.

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A concern was raised by Seamless contributors regarding the pause feature that exists in the DEGEN token contract. From what the contributor can tell the multisig owner of the DEGEN token contract can choose to pause transfers of the DEGEN token at any time.

This creates high risk for Seamless since if this pause is enabled at any point it would prevent borrowers from repaying their debt (or even prevent liquidations). Contributors are looking at options to remove this risk.

One option that was proposed is to have the DEGEN team effectively revoke their permission to pause transfers while maintaining their access to other admin features of the DEGEN token. This could be done by granting the owner role of the DEGEN token to a new smart contract that does not have a pause function but is able to pass through function calls to other admin functions.

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