Scream 🤝 Morphex Proposal
Scream and Morphex contributors have been working on a collaborative effort for some time now, and are excited to present a novel capital-efficient borrowing model on Fantom for both communities. This proposal describes the addition of interest-bearing collateral on SCREAM in the form of wrapped MLP (an auto-compounding wrapper for staked MLP, contract here), where MLP is an index of bluechip crypto assets such as BTC, ETH, FTM, and stablecoins that is the liquidity for trading on Morphex. MLP earns 60% of all Morphex protocol revenue as well as additional escrowed MPX (“esMPX”) rewards. For more information about Morphex, see their docs.
Technical Overview
wMLP is an auto-compounding wrapper for MLP which can be utilized as collateral on Scream’s v2 money market. In terms of implementation, it consists of 2 main parts:
- The auto-compounding wrapper
- Adding the wrapper as collateral on SCREAM
wMLP
The wrapper is based on the latest Yearn vault architecture and will be hosted on the user interface of Morphex. This vault will accept staked MLP for deposits with a simple strategy generating yield — deposit MLP into Morphex to earn esMPX + FTM and compound all FTM back into MLP. The esMPX rewards will be staked for esMPX + FTM + Multiplier Points, again sending the FTM yield to be further compounded into MLP, and staking the earned esMPX and MPs. The wrapper is fully liquid and users will be able to withdraw their principle MLP and any earned interest from FTM compounding at any time.
New Collateral
The vault receipt tokens of the MLP vault (“wMLP”, or wrapped MLP) will be whitelisted on Scream to be used as interest-bearing collateral, and will be exclusive to Morphex’s MLP. For oracle pricing, an external oracle pulls the price of MLP from the MlpManager contract, and factors in the exchange rate of MLP to wMLP (as it is an auto-compounding wrapper, where the amount of MLP per wMLP will always increase with each harvest). This price is then used to determine its collateral price on Scream.
- Starting LTV: 25%
- Starting Supply Cap: 250_000e18 (MLP’s price is ~$1)
Note that these are starting values, and will be raised over time as Morphex liquidity grows and the system becomes more battle-tested.
Other considerations
- In collaboration with the Morphex team, all Morphex core contracts have been placed behind a 24-hour timelock controlled by a 2/3 multisig, which will shortly be upgraded to a 48-hour timelock and a 3/5 multisig. Though the multisig offers some protection of Scream’s users from a malicious actor (in the case of compromised keys, etc.), the timelock adds an additional buffer for Scream’s guardian multisig to pause markets as needed should such an emergent situation arise.
- Note that these permission issues were inherited when forking from GMX, and were raised in Quantstamp’s audit. By taking steps to address these issues, Morphex is demonstrating a strong commitment to user safety and minimizing trust wherever possible.
- Prior to adding wMLP as collateral to Scream, a final review will take place to confirm the status of admin/gov powers in the Morphex system.
Benefits
By allowing users to utilize MLP as collateral (through the form of wMLP, using battle-tested Yearn vault code), they are able to unlock greater capital efficiency on their assets, allowing them to earn auto-compounding yield and borrow against it. To cover the cost of develop and maintenance, and to add another revenue stream to help repay Scream’s v1 bad debt, a 7.5% performance fee will be taken on every harvest, accumulating as wMLP in the Scream treasury.
