Proposal to integrate AIR tokens to Genshiro via XCM integration

Dear Altair Community,

Genshiro is a one-stop DeFi platform to earn, borrow and trade at max efficiency. Genshiro is Equilibrium’s Kusama-based canary network, which won its parachain auction on Kusama late last year.

To realize its objectives to offer cross-chain DeFi solutions to the ecosystem, Genshiro is currently actively onboarding Kusama ecosystem’s partners’ assets onto its platform via XCM integration. So far, Genshiro has integrated with Karura and Parallel Heiko, and is working on integrating several other parachain partners.

Altair being a unique DeFi protocol on Kusama that brings real world assets to the ecosystem truly excites us. Therefore, Genshiro would like to propose adding Altair’s native token (AIR) via XCM integration to Genshiro’s product line.

DeFi use cases of AIR on Genshiro:

Borrowing with low collateralization

The integration will allow AIR users to use their AIR tokens as collateral to borrow other assets on Genshiro. Apart from Kusama-native USDT stablecoin, users will also be able to borrow other assets that are integrated with Genshiro such as ETH, BNB or other integrated parachain assets.

Margin trade on Genshiro’s fully on-chain orderbook DEX with high leverage without compromising system risks

Due to Genshiro’s innovative approach in pricing risks of borrowers and protocol solvency directly on-chain (a big shout out to Substrate technology that makes this kind of advanced financing engineering possible on-chain), Genshiro is able to offer high leverage trading without compromising system’s risks tolerance.

Therefore, AIR users can collateralize AIR to margin trade on the orderbook DEX with high leverage, e.g. KSM/EQD pair, without having the need to own either one of these tokens. In addition, users are able to trade in a decentralized manner while enjoying UI and features offered by a typical CEX.

Earning by staking AIR in Lending/ Insurance Pool

Genshiro introduces a safeguarding mechanism in the form of an insurance role where users, called bailsmen, provide liquidity to the insurance pool and insure the system in the event of liquidation. Bailsmen lend out assets and secure the system against liquidating borrowers and earn penalty rewards and interest rates in the process.

Users have the option to act as bailsmen by staking their AIR in Genshiro’s liquidity pool to secure the system, and earn interests payable by borrowers.

Please give us your feedback !

We very much look forward to bringing AIR to Genshiro via XCM integration, and very much appreciate feedback from the community on this proposal. Please feel free to share your thoughts with us!

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Hi Nathalie!

Welcome to the Centrifuge ecosystem. Glad to see more and more parachains willing to integrate AIR on their DEXes/protocols. This is the big strength of the Dotsama ecosystem! :boom:

A very interesting product you have to offer. I like the idea of staking in the Insurance pool, in particular the safeguarding mechanism.
Is there a lockup for the bailsmen to stake their AIR or can the users withdraw their tokens at any given time?
What’s the average APY bailsmen from other comparable tokens did earn in the past?
What happens in case of mass liquidation? Can the bailsmen lose their deposit or what kind of protection do you have?

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Hey, thanks for your questions. Very good questions indeed! Kindly find the answers below:

Is there a lockup for the bailsmen to stake their AIR or can the users withdraw their tokens at any given time?
There is no lockup period. Withdrawal request can be made anytime. Please do however note that there is a minimum deposit requirement of $1000 equivalent for becoming a bailsman.

What’s the average APY bailsmen from other comparable tokens did earn in the past?
Primary source of revenue:
Currently the average APY is 20 – 25% in a form of farming rewards. But it may subject to change to 5-10% after we introduce new farming mechanics in the future.

Other source of revenue:

  • Bailsmen also earn interest from borrowers (interest income minus base fee of 1%) for securing the system.
  • Bailsmen earn 5% liquidation penalties from borrowers.

What happens in case of mass liquidation? Can the bailsmen lose their deposit or what kind of protection do you have?
If the value of borrowers’ collateral value or LTV drops below 110%, borrowers get 24 hours warning and liquidation is triggered thereafter (105% LTV is absolute liquidation). Then borrowers’ debts and collaterals are distributed across the entire bailout pool.
In short, every bailsman is given his share of collateral and debt, based on his relative share of the entire bailout pool, plus penalty rewards.

In terms of protection:
Basically there are 3 layers of defense for Genshiro system.

1st layer of defense: Overcollateralization from borrowers
2nd layer of defense: Bailsmen pool that insures the system in the event of chaotic situations
3rd layer of defense: In extreme case scenario where the debt value in bailsmen pool exceed total collateral value, the Stability Fund will come into play and processes unhandled liabilities. The Stability Fund is initially funded by own capital, and thereafter replenished via a portion of base fee generated through borrowing activities.
In short, this is akin to “insurance policy” that guarantees the system recapitalization in case of extraordinary market events.

I hope we addressed your questions! Happy to clarify further should you need more info.

Else, feel free to find out more about the bailsmen mechanics here !

3 Likes

Good day NatalieCheah and welcome!
Thank you for your explanation post.
I fully agree with your proposal to open XCM.
If you have a RFC post on the Genshiro governance forum feel free to post the link.
I will definitely vote for this integration!

Thanks for the detailed reply. I think the community is very interested and we are looking forward to the collaboration

Hey ImdioR and Tjure07, thanks very much for the support!
We are happy to see positive responses from the Centrifuge & Altair community!
We will proceed to put up a proposal to Altair for opening HRMP channels between the two parachains!
Super excited to bring more DeFi use cases to AIR!

1 Like

I will support that too