Revised Parameters for nASTR Token in Starlay on Astar EVM

Discussion
1

Title

Revised Parameters for nASTR Token in Starlay on Astar EVM

Author

@SeiyaChida (Starlay Chan Initiative)

Motivation

We propose adjustments to the parameters for the nASTR token in the Starlay Network. These changes aim to enhance the risk management and stability of nASTR in our ecosystem.

The initial proposal for listing nASTR on Starlay can be found here. It details the original parameters and motivations for integrating nASTR into the Starlay ecosystem.

Specification

Updated Price Oracle and nASTR Token Concerns

  • The DIA-provided price oracle at 0x35490A8AC7cD0Df5C4d7Ab4243A6B517133BcDB1 is tailored specifically for nASTR, with a unique functionality compared to standard oracles.
  • This oracle will not update nASTR prices if the last trade deviates by more than 20% from Coingecko’s value, waiting until it aligns within the 20% range. This approach is markedly different from typical price oracles.

Risk Mitigation and Parameter Adjustments

  1. Guardians and Liquidity Risks: Despite having the guardian, if the system fails to function normally due to the low liquidity, there is a concern about price manipulation leading to the exploitation of Starlay’s shared pool.
  2. Price Fluctuation Response: In the event that the price of nASTR (or ASTR) fluctuates by more than 20% and does not return to its original level, the price in Starlay’s provided oracle will not change, posing a risk to the assets in the shared pool. If the price falls by more than 20% and continues to decline, Starlay’s assets could be permanently drained.
  3. Smart Contract Risks: nASTR faces heightened smart contract risks due to additional adaptors, compared to tokens like stETH.

Proposed Solutions

  • In response to points 2 and 3, we suggest manually freezing nASTR to halt new borrowing and collateral under specific conditions, subject to governance approval. This would necessitate a new Guardian system for rapid response post multi-signature approval and it’d need to be another discussion.
  • For point 1, we propose setting the Loan-to-Value (LTV) ratio for nASTR at 20%. This is based on calculations that indicate significant financial resources would be required to manipulate the price, making it a secure threshold.

Revised Parameters for nASTR

  • Loan to Value (LTV): Reduced to 20% from 30%.
  • Liquidation Threshold: Lowered to 25% from 55%.
  • Liquidation Penalty: Remains at 15%.
  • Reserve Factor: Unchanged at 20%.
Token LTV Liquidation Threshold Liquidation Bonus Reserve Factor U Optimal Rate Slope 1 Slope 2
nASTR 20% 25% 15% 20% 55% 7% 300%

Next Steps

  • Gather community consensus & feedback on this discussion.
  • Escalate to the proposal (signaling) phase.
  • Conduct Snapshot polling vote to finalize these decisions.
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