[RFC] Add tGRT & tMATIC as isolated markets

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Title: tGRT & tMATIC (Tenderize) as isolated markets

Author: @nico_tenderize
Related Discussions: N/A
Submission Date: 29.01.2023
Simple Summary: tGRT and tMATIC are liquid staking tokens by the Tenderize protocol that are always redeemable 1:1 with their underlying asset (similar to stETH). This proposal aims to add tGRT and tMATIC as isolated lending/borrowing markets to Euler, using the price oracles for their underlying assets (GRT and MATIC respectively).

Abstract:
tGRT and tMATIC are liquid staking tokens by the Tenderize protocol that are always redeemable 1:1 with their underlying asset (similar to stETH). This proposal aims to add tGRT and tMATIC as isolated lending/borrowing markets to Euler, using the price oracles for their underlying assets (GRT and MATIC respectively).

Tenderize is the only existent liquid staking protocol for GRT and also offers liquid staking for MATIC (among others). Despite protocols like The Graph being very important cornerstones of the web3 ecosystem, they are not receiving much love in DeFi. We want to change that. This proposal can act as a proof of concept to add future Tenderize assets to Euler.

Note: Polygon (MATIC) is one of the largest protocols in terms of market cap and already has a “cross” market on Euler. The Graph (GRT) is the largest data indexing protocol in the space and already has an “isolated” market on Euler.

Implementation

We want to list tGRT and tMATIC as isolated markets using the oracle for their underlying asset.
We believe this should be possible because of the following reasons:

  • Euler already handles rebasing tokens like stETH, tTokens work very similar to stETH
  • 1 GRT = 1 tGRT : tTokens are always redeembable 1:1 for the underlying asset through unstaking (withdrawals).
  • Euler already has proven oracles for MATIC and GRT

We believe the only argument against using these oracles, is that e.g. the market price of tGRT vs GRT is not strictly 1:1, but depends on the state of the tGRT/GRT liquidity pool. We don’t think this is a valid counter argument because:

  • The user is borrowing/lending tGRT and not its underlying asset
  • The secondary market (tGRT/GRT) is only one way of converting between tToken and its underlying, withdrawals are always available.

Motivation

  • Allows more options for the current MATIC and GRT depositors
  • Creates a narrative for Euler to be very friendly towards LSD
  • Allows for more sophisticated strategies for (liquid) staking GRT and MATIC
  • Open the door for adding more Tenderize assets in the future
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Hey @nico_tenderize ! Euler is a permissionless protocol, Any asset that has a WETH pair on Uniswap v3 can be added as a lending market on Euler by anyone straight away. This asset will be automatically assigned with isolated market parameters. So in this regard, there is no need in a DAO decision for that.

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Hi @Raslambek , thanks.

The problem is that tGRT or tMATIC doesn’t have a WETH pair on Uniswap v3, neither is it listed on multiple exchanges with sufficient trading volume. Therefore we can’t have tGRT/ETH or tGRT/MATIC oracles at the moment.

After talking to @euler_mab , he proposed to maybe use the oracles for the underlying assets instead (since the derivate is priced 1:1 anyway), since their health factor is sufficient. But we should gauge opinion on using a GRT oracle for an asset that isn’t strictly GRT , but its staked derivative.

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