Whitelisting sAVAX as collateral on Anchor on Terra will provide Avalanche and Terra users with more options to borrow on Anchor. sAVAX is BENQI’s liquid staking derivative (wormhole wrapped wasAVAX on Terra), one of the most liquid token staking derivatives in the Avalanche ecosystem.
The most exciting part of this whitelisting is that it will be the first truly cross-chain collateral type that allows AVAX users to natively borrow on Avalanche while at the same time allowing native Terra users to borrow against the wrapped version on Terra as well.
This whitelisting will increase Anchor TVL, improve protocol cash flow, and further diversify Anchor’s total available collateral.
BENQI Liquid Staking is a non-custodial liquid staking solution that allows users to stake AVAX and receive sAVAX, which is an on-chain representation of delegation positions with Avalanche validators.
Traditional staking on Avalanche requires users to lock up AVAX on the P-Chain, which prevents them from accessing the asset until the staking period ends. BENQI’s Liquid Staking solution provides users with the opportunity to unlock their “staked” assets through liquid staked sAVAX.
By supplying AVAX into the BENQI Liquid Staking protocol, users receive sAVAX which earns rewards from staking on Avalanche network. The price of sAVAX goes up each epoch relative to AVAX with rewards being accrued to the underlying staked AVAX.
sAVAX can be used within DeFi applications on the C-Chain including AMMs (Trader Joe, Pangolin, etc.) and lending protocols (BENQI, Anchor, etc.). Users will now be able to access their yield-bearing sAVAX as liquidity to participate in DeFi and earn additional rewards.
- Increase TVL by bringing more liquidity to Anchor by onboarding sAVAX as collateral
- Break ground for the truly Anchor cross-chain experience
- Diversify the total collateral pool on Anchor
- Allow AVAX stakers to borrow UST easily
- Lay foundation for future collaborations with BENQI & Ava Labs
Whitelist sAVAX as collateral on Anchor with a max LTV of 60%
- Smart contract/technical risks
- Counterparty risks: BENQI’s sAVAX has been audited by Halborn
- Liquidity Risk: the current deepest liquidity for sAVAX-AVAX LP is on Trader Joe with 150 million in liquidity
- More DEX listings are ideally coming with LOOP and others planned in the future
- If liquidity continues to grow as quickly as it has, an increase to 80% LTV in the next few months is possible.
- Bridge risk: aAVAX and cw20 standard wasAVAX is bridged to Terra through the Wormhole bridge and can lose all value if the bridge is compromised
- 1.5 million AVAX is staked on Benqi representing 0.7% of all staked AVAX
sAVAX (regular ERC20 token):