# \[Proposal\] sAVAX collateral onboarding **URL:** \ **Category:** Mechanism\ **Created:** [March 10, 2022, 1:44pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279 "2022-03-10T13:44:30Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![bitn8](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/bitn8/32/61_2.png) [@bitn8](https://forum.anchorprotocol.com/u/bitn8)\ **Post date:** [March 10, 2022, 1:44pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/1 "2022-03-10T13:44:30Z")
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](https://staking.benqi.fi/stake) (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. ### Background [BENQI Liquid Staking](https://docs.benqi.fi/benqi-liquid-staking/overview) 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. ### Motivation 1. Increase TVL by bringing more liquidity to Anchor by onboarding sAVAX as collateral 2. Break ground for the truly Anchor cross-chain experience 3. Diversify the total collateral pool on Anchor 4. Allow AVAX stakers to borrow UST easily 5. Lay foundation for future collaborations with BENQI & Ava Labs ### Proposal Whitelist sAVAX as collateral on Anchor with a max LTV of 60% ### Risks - Smart contract/technical risks - Counterparty risks: BENQI’s sAVAX has been [audited by Halborn](https://162914606-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MViz_ikDZy4OemUj_VI%2Fuploads%2Fsjpc2u859ZnLjsedBuel%2FBenqi_LiquidStaking_Smart_Contract_Security_Audit_Report_Halborn_Final.pdf?alt=media&token=6b646d03-5123-42cd-b210-2238f8d0242b) - 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 ### Analytics - 1.5 million AVAX is staked on Benqi representing 0.7% of all staked AVAX **Testnet Contracts** **Avalanche (Fuji)** sAVAX Deployer: `0xbCB7a4D75AFA2bFbd397bfa73C989D5430CbF686` sAVAX (regular ERC20 token): `0x56bbcc9149A355E8fF7A5B676C67Eec33a12F613` **Terra** sAVAX (Wormhole): `terra12x8dnuzuqpywue9d8qy2dlc2n2ux5a77yjg0zl` Oracle Feeder: `terra1mm4xmq67wezl9mn9h7w6lszzrpnw2kfdpx5dnm` Custody: `terra1eyylxl2g300vyfwnclpyqndus78ypnurqp8tgk` **Mainnet Contracts** **Avalanche (C-chain)** sAVAX `0x2b2C81e08f1Af8835a78Bb2A90AE924ACE0eA4bE` **Terra** sAVAX (Wormhole) `terra1z3e2e4jpk4n0xzzwlkgcfvc95pc5ldq0xcny58` Oracle Feeder TBD Custody `terra1t4x4393l2kx8e5rpdkjkmt8c4ghkkpak6mdwxn` ---
**Author:** ![Thuxo](https://avatars.discourse-cdn.com/v4/letter/t/898d66/32.png) [@Thuxo](https://forum.anchorprotocol.com/u/Thuxo)\ **Post date:** [March 10, 2022, 2:13pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/2 "2022-03-10T14:13:57Z")
Yes please. I am in full support. Been waiting for this! ---
**Author:** ![keredlee](https://avatars.discourse-cdn.com/v4/letter/k/9d8465/32.png) [@keredlee](https://forum.anchorprotocol.com/u/keredlee)\ **Post date:** [March 10, 2022, 2:26pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/3 "2022-03-10T14:26:28Z")
Already bought AVAX in preparation for this, support ---
**Author:** ![Tiegus](https://avatars.discourse-cdn.com/v4/letter/t/c68b51/32.png) [@Tiegus](https://forum.anchorprotocol.com/u/Tiegus)\ **Post date:** [March 10, 2022, 2:30pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/4 "2022-03-10T14:30:41Z")
This would be another awesome step forward for Anchor and the Terra community at large. Fully support this. I’m sure every Lunatic would agree to push this through. ---
**Author:** ![touchmyblood](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/touchmyblood/32/863_2.png) [@touchmyblood](https://forum.anchorprotocol.com/u/touchmyblood)\ **Post date:** [March 10, 2022, 4:12pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/5 "2022-03-10T16:12:48Z")
This is a great idea, we need more assets that can be used for collateral on Anchor to support the whole ecosystem and to encourage new users onto the terra blockchain. AVAX is a natural next step. High 5s all around. ---
**Author:** ![tlonist](https://avatars.discourse-cdn.com/v4/letter/t/b5e925/32.png) [@tlonist](https://forum.anchorprotocol.com/u/tlonist)\ **Post date:** [March 10, 2022, 4:21pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/6 "2022-03-10T16:21:08Z")
This would be great!! ---
**Author:** ![Cryptodave](https://avatars.discourse-cdn.com/v4/letter/c/c2a13f/32.png) [@Cryptodave](https://forum.anchorprotocol.com/u/Cryptodave)\ **Post date:** [March 10, 2022, 5:13pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/7 "2022-03-10T17:13:33Z")
Full support for this proposal ---
**Author:** ![fig](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/fig/32/259_2.png) [@fig](https://forum.anchorprotocol.com/u/fig)\ **Post date:** [March 10, 2022, 5:26pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/8 "2022-03-10T17:26:56Z")
Seems like the community is in agreement - this would be an awesome add. While there are inherent smart contract risks, this integration further moves Anchor towards a cross chain future and positions itself for deployment on different mainnets. Sounds like all good things: > [@bitn8](#): > > increase Anchor TVL, improve protocol cash flow, and further diversify Anchor’s total available collateral. Excited to see this progress. ---
**Author:** ![paletas](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/paletas/32/341_2.png) [@paletas](https://forum.anchorprotocol.com/u/paletas)\ **Post date:** [March 10, 2022, 6:54pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/9 "2022-03-10T18:54:55Z")
I’m all for more collateral types but I believe it would be important for the proposal to mention how much this new collateral yields in staking, that will also help explain why it’s being proposed at 70% LTV. - How much does sAVAX yield? - Why 70% LTV? ---
**Author:** ![xulian](https://avatars.discourse-cdn.com/v4/letter/x/51bf81/32.png) [@xulian](https://forum.anchorprotocol.com/u/xulian)\ **Post date:** [March 10, 2022, 8:19pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/10 "2022-03-10T20:19:35Z")
yes yes yes, this is exciting. ---
**Author:** ![xulian](https://avatars.discourse-cdn.com/v4/letter/x/51bf81/32.png) [@xulian](https://forum.anchorprotocol.com/u/xulian)\ **Post date:** [March 10, 2022, 8:21pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/11 "2022-03-10T20:21:11Z")
staked Avax yields around 10% APR so similar to bLuna ---
**Author:** ![bitn8](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/bitn8/32/61_2.png) [@bitn8](https://forum.anchorprotocol.com/u/bitn8)\ **Post date:** [March 10, 2022, 8:33pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/12 "2022-03-10T20:33:31Z")
Was supposed to be 60%. Thanks for catching that. That is based on not having enough data. ---
**Author:** ![Switzcrypto](https://avatars.discourse-cdn.com/v4/letter/s/a9adbd/32.png) [@Switzcrypto](https://forum.anchorprotocol.com/u/Switzcrypto)\ **Post date:** [March 10, 2022, 8:33pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/13 "2022-03-10T20:33:47Z")
On board with this. Would be a great addition to bring the $AVAX users over to the Terra ecosystem. Yield sits around 10% apr for staked $AVAX. ---
**Author:** ![paletas](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/paletas/32/341_2.png) [@paletas](https://forum.anchorprotocol.com/u/paletas)\ **Post date:** [March 10, 2022, 8:41pm UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/14 "2022-03-10T20:41:42Z")
Thank you for stating that and thanks @Switzcrypto for the same, @bitn8 can we add the expected staking yield on the proposal? I believe this is an important to state for future proposals of new collateral types as it directly correlates to the expected cash flow it brings to the protocol. ---
**Author:** ![TheThadP](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/thethadp/32/867_2.png) [@TheThadP](https://forum.anchorprotocol.com/u/TheThadP)\ **Post date:** [March 11, 2022, 1:33am UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/15 "2022-03-11T01:33:47Z")
While I am for diversifying the assets that Anchor is generating revenue from, this will continue to drain the treasury. sAVAX yields about 7%, which means the LTV would need to be about 35% for the addition to be accretive for Anchor. That being said, I think we should add sAVAX with the same LTV as current assets, and fix the broader treasury issues in a separate AIP. ---
**Author:** ![codeNoodle](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/codenoodle/32/136_2.png) [@codeNoodle](https://forum.anchorprotocol.com/u/codeNoodle)\ **Post date:** [March 11, 2022, 4:29am UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/16 "2022-03-11T04:29:02Z")
Current Anchor Borrow APR is 13.1%, sAVAX earns 7.2%. That is 7.2% of **all** of their deposited collateral. If their LTV was the average on Anchor right now (~48.7%), then that gives Anchor an overall gain of 13.6% and a 9.7% loss for their position, making it a net positive for the protocol. _gain = 6.4% APR from the borrowed UST (13.1%x48.7%) plus 7.2% from collateral_ _loss = 20% earn rate on their 48.7% borrowed UST amount, assuming they put all of it in Earn_ ---
**Author:** ![LesF.Goh](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@LesF.Goh](https://forum.anchorprotocol.com/u/LesF.Goh)\ **Post date:** [March 11, 2022, 7:27am UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/17 "2022-03-11T07:27:56Z")
I’m excited to support this! ---
**Author:** ![Deepnb](https://avatars.discourse-cdn.com/v4/letter/d/43a26b/32.png) [@Deepnb](https://forum.anchorprotocol.com/u/Deepnb)\ **Post date:** [March 11, 2022, 8:45am UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/18 "2022-03-11T08:45:06Z")
> [@bitn8](#): > > 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 Great proposal! I think you can mitigate the bridge risk by using another bridge, which uses a totally different safety mechanism to secure the transactions. Have you heard of MAP Protocol? ---
**Author:** ![satriapamudji](https://sea2.discourse-cdn.com/flex016/user_avatar/forum.anchorprotocol.com/satriapamudji/32/873_2.png) [@satriapamudji](https://forum.anchorprotocol.com/u/satriapamudji)\ **Post date:** [March 11, 2022, 8:51am UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/19 "2022-03-11T08:51:23Z")
Definitely in full support of this. This feels like a natural step towards making the Anchor yield reserves sustainable + unlocks more capital efficiency for native AVAX users. ---
**Author:** ![111314](https://avatars.discourse-cdn.com/v4/letter/1/ed8c4c/32.png) [@111314](https://forum.anchorprotocol.com/u/111314)\ **Post date:** [March 11, 2022, 8:53am UTC](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279/20 "2022-03-11T08:53:23Z")
MAP Protocol has a safety bridge.[https://bridge.maplabs.io/#/home](https://bridge.maplabs.io/#/home) they will soon support AVAX. Maybe this is a good choice [Next page](https://forum.anchorprotocol.com/t/proposal-savax-collateral-onboarding/3279.md?page=2)