MIR-44┃Add native USDC as paUSD collateral on Polygon PoS

Integration Request (MIR) Approved MIRs
1

Summary:
This proposal aims to add native USDC as paUSD collateral on Polygon PoS.

Rationale:
Circle brings USDC natively to new blockchain networks to empower developers to build on a stable foundation they can trust. Native USDC is officially issued by Circle and is always redeemable 1:1 for US dollars.

In the case of Polygon PoS, there also exists a “bridged” form of USDC known as USDC.e, which is a USDC that has been bridged from Ethereum. Bridged USDC (USDC.e) is not directly issued by Circle.

Since November 10th, Circle has discontinued the support of deposits and withdrawals for bridged USDC.e for their services to promote the native USDC deployed on Polygon PoS.

This is why we propose to integrate the native USDC on parallel on the Polygon PoS, introducing a more reliable asset (native USDC) issued by Circle instead of an asset with more risk (USDC.e) since it is not issued directly by Circle but by the Polygon Bridge which is held by a ⅗ multisig.

Project Presentation:
Protocol name : Circle
Token requested : USDC
Token contract address : 0x3c499c542cEF5E3811e1192ce70d8cC03d5c3359
Chain requested : Polygon PoS
Relation with the project : none.
Website: Circle | USDC & Web3 Services for a new financial system

Token metrics & Risk assessment:

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  • Smart contract risk: A
    On November 10th, Circle announced they will discontinue the support of deposits and withdrawals for bridged USDC.e for their services, This could result in a declining supply over time of USDC.e in profit to native USDC. USDC has generated more than 15M transactions.

  • Counterparty risk: A-
    As it’s backed by real US dollars, USDC is centralized. The technology to mint new USDC and hold the backed USD is based on a legal framework. It is currently maintained by the CENTRE consortium which is a trusted entity in the ecosystem. Furthermore, USDC is the first regulated cryptocurrency bringing a lot of legitimacy to the space. Still, the infrastructure is based on public blockchains where regulators have little power. There are currently 361k USDC holders on Polygon PoS.

  • Market Risk: B+
    USDC on Polygon PoS has a $180M market cap, one of the highest market cap and trading volume of mrc-20 tokens on Polygon PoS. Furthermore the price is pegged to USD. For this reason we consider the risks of USDC mitigated by USD.

  • Chain Risk : A
    Polygon PoS had 0 outages over the last 6 months. (Polygon PoS Chain Block Count and Rewards Chart | PolygonScan)

  • Liquidity Risk of paUSD on Polygon PoS: C
    The paUSD/USDC Univswap V3 pool has $45k TVL.

This provides the following price impact on the following trade sizes:

1000 USDC → paUSD: 0.353%
10000 USDC → paUSD: 0.739%
25000 USDC → paUSD: 1.377%
50000 USDC → paUSD: 100%

  • Overall Risk : A-
    The Overall Risk is the average of the points mentioned above.

Means:

  • Human resources: Multisig DAO signers will need to sign and execute transactions to add USDC as paUSD collateral on Polygon PoS.
  • Treasury resources: There is no cost for the treasury to add USDC on Polygon PoS.

Technical implementation:

  1. Set the chainlink oracle related to the USDC: USDC/USD into PriceFeed Contract
  2. Add USDC in the ConfigProvider Contract with all parameters decided by the Parallel governance.

Voting options:

  • Add USDC as paUSD collateral on Polygon PoS
  • Against USDC as paUSD collateral on Polygon PoS
  • Abstain

Authors: @starny & @Jeanbrasse from MimoLabs

Community poll:

  • Add USDC as paUSD collateral on Polygon PoS
  • Against USDC as paUSD collateral on Polygon PoS
  • Abstain
0 voters
2 Likes
2

the proposal is live on Snapshot: Snapshot

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3

The proposal has been approved by the DAO, result: Snapshot

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