Hey Vesta Community,
Lito from Hop.exchange here. I would hereby like to suggest adding Hop stableswap LP tokens as eligible collateral on Vesta to mint $VST stablecoins.
This would present both an opportunity for Hop LP’s to leverage their LP position and increase their returns and for Vesta to increase the circulating supply of $VST without taking on much risk due to the high quality of Hop LP tokens as collateral.
Hop LP tokens
Hop uses AMM’s on each scaling solution it supports to create markets between hTokens and canonical tokens. These AMM’s are utilized every time a user transfers assets in or out of Arbitrum. For example, if a user transfers $ETH into Arbitrum they will receive hETH from the Hop Bonder, which will be converted into $ETH in the Hop AMM.
hTokens are 100% backed by the equivalent amount of tokens in the Hop bridge contract on Ethereum to the same degree as Arbitrum aTokens are 100% backed by the Arbitrum bridge contract on Ethereum. hTokens on Arbitrum can be redeemed 1:1 at any time for the same amount on Ethereum. This is to say there is no reason hTokens should ever deviate significantly from the peg as it can easily be arbitraged. A significant deviation has never happened in over 1 year since Hop has been live.
Today, there’s around $5m tvl in the $ETH pool on Arbitrum and close to $3m in the $USDC pool. The DAI and USDT pools are fairly small and therefore uninteresting for the time being. This could change if the Hop DAO decides to introduce liquidity mining incentives for the Hop AMM’s.
The AMM’s are stableswap pools using a similar price curve than Curve or Saddle. The contracts were originally written by the Saddle team and are widely used in production across DeFi.
The price of the LP tokens can be calculated on-chain using the method calculateRemoveLiquidity which returns the amount of hTokens and canonical tokens given a specific amount LP tokens as input. If calling the calculateRemoveLiquidity using 20 LP tokens as input returns a position of 8 ETH + 9hETH and 1 $ETH = $1000 the LP tokens would be worth $17,000.
Example ETH LP tokens on Arbitrum: https://arbiscan.io/address/0x59745774ed5eff903e615f5a2282cae03484985a:
The Hop community looks forward to this collaboration and I will be on standby to respond to any questions about the mechanics of our LP tokens or associated risks.
Smart contract risk
What is the link to the main project Github repo?
Please provide an Etherscan link with verified contracts.
What is the age of token in days?
What is the number of transactions in token contract to date?
How many holders of holders of the token are there?
3568 for ETH LP token
4225 for USDC LP token
How would you describe the decentralization level of the governance of the protocol that issues this token?
Hop bridge contracts are managed by a multi-sig with a 24hr timelock. The AMM’s are fully immutable.
What is the setup of the main protocol multisig governing this token?
There is no multisig governing LP tokens.
How upgradeable is the token contract?
The AMM’s are not upgradable.
Please provide some numbers describing the depth of liquidity on this token across some different markets.
$5m TVL for $ETH
$2.7m TVL for USDC
How accurate are oracles for this token? Do they exist? If so, for how long?
The on-chain methods to calculate the price of the LP tokens are very difficult to manipulate.
Please provide the token volatility, defined as the Standard Deviation of log-returns for specific time frames
Same volatility as $ETH.
What is the future emission schedule of the token?
Can be minted infinitely as long as capital is deposited into the pool.
What is the current total and circulating supply of the token?
2636 for ETH LP tokens