Add Myth Finance Liquid Staking Tokens (LST) into Folks Finance Algorand app isolated market.
I suggest, some of these tokens will be added first onto Algorand isolated market (some time after TINY is live and we can be sure everything works well) and then maybe over time migrated one by one onto main book.
Liquidity:
Myth Finance Liquid Staking Tokens are basically backed by 1 ALGO + ASA part per each LST (1 LST = 1 ALGO + n ASA) and tokens are always redeemable.
Security:
What comes to security, D13 is behind Myth Finance, so security should be top notch already, but maybe there can be similar audit than Tinyman’s tALGO had?
LST price feed:
Liquid staking token price is basically 1 ALGO + n ASA. This actual price can be fetched anytime and no need to rely on “market pricing” we usually got from pools. So price can be calculated like we have redeemed the token and broken it into pieces. So price has two separate factors, ALGO & ASA. So formula for one LST is: LST_px = ALGO_px + n x ASA_px.
This kind of price calculation is not so easy to manipulate and relies mostly on ALGO price, leaving ASA part only minimal impact, because Myth liquid staking tokens are mostly ALGO and ASA part is usually very small.
Collateral value:
I suggest token collateral values will be checked individually, but max can probably be something like 50% if token is mostly just ALGO and ASA part is very small fraction.
Risks:
I think there are two major risks:
1: is Myth safe? - In my opinion, there should be similar community audit like Tinyman’s tALGO had. That said D13 is one of the best auditors and has done many audits, so Myth should be sound.
2: Gaming: - Can ASA price be gamed. What I mean by this; can someone pump ASA price so much that it elevates LST price and then malicious actor takes out max loan and then dumps ASA to ground leaving protocol with bad debt? This is big risk if we are not careful which LSTs we choose to take into platform and pay attention to underlying ASAs. Good thing is that, this can be handled pretty well if we only take top ASAs which have proven to be around long enough to be trusted, widely held and are no longer in initial pump & dump or hype phase.
Which tokens?:
I suggest we only accept most trusted ASAs with decent Myth mint amounts (so no fear to fall below 30k), like coopALGO, oraALGO, alphaALGO, monkoALGO, gobtcALGO & vestALGO. All these tokens should be pretty reliable choices. All underlying ASAs have decent amount of liquidity. In case of liquidation LST’s ALGO part should cover debt already, but of course ASA part has to be also liquid enough for liquidators.
Other parameters like collateral cap ($) etc can be checked by Folks Finance team and can be amended over time when things evolve, but this was just a big picture why I think Folks Finance should be able to add these into platform without taking huge risks and jeopardizing protocol.
Best regards,
ROAM