QIP245: Add cbBTC as Collateral for MAI

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network: Base
author: PabloThePenguin.eth
implementor: Dev team and QiDao Guardians
implementation-date: post approval
created: 2025-01-03

Summary

Coinbase Wrapped Bitcoin (cbBTC) is a tokenized Bitcoin product issued by Coinbase, fully backed 1:1 by Bitcoin in Coinbase custody. It allows Bitcoin to be utilized within Ethereum-based decentralized finance (DeFi) ecosystems. Adding cbBTC as collateral for MAI will enable Bitcoin holders to access liquidity while increasing QiDao’s Total Value Locked (TVL) and utility of MAI within the Base ecosystem.
cbBTC has a Total Value Locked (TVL) of over $1.5 billion and strong on-chain liquidity across major decentralized exchanges, making it a suitable collateral asset.

More information can be found at: (cbBTC Overview)[https://www.coinbase.com/cbbtc]

Security

cbBTC is backed 1:1 by Bitcoin held in Coinbase custody, is fully transferable and can be unwrapped and redeemed into an equivalent amount of the underlying Bitcoin. The asset has sufficient on-chain liquidity to be used as collateral for CDP lending.

Vault specifications:

Collateral Asset: cbBTC
Minimum Collateral-to-Debt Ratio: 125%
Fees: 10% variable interest rate
Minimum Debt: 10 MAI
Maximum Debt: 500,000 MAI
Oracle Provider: Chainlink price feeds for cbBTC/USD - (Contract Address)[https://basescan.org/address/0x07DA0E54543a844a80ABE69c8A12F22B3aA59f9D]
Risk Grading: B-
Risk Methodology: (Risk Analysis Rubric): https://docs.google.com/spreadsheets/d/1TW5kuPZMJSVE1_DPT2GPbR7gB_0fgA_zjx20Q3o4-jM/edit?usp=sharing

Motivation

• The inclusion of cbBTC as a collateral option in the MAI ecosystem brings several benefits:
• Increased TVL and revenue: Onboarding cbBTC enables Bitcoin holders to access liquidity within the Base ecosystem, expanding MAI’s user base, increasing TVL, and generating more revenue for QiDao.
• Synergy with Base Ecosystem: cbBTC is a key Bitcoin product on Base, and its inclusion aligns with QiDao’s strategy of leveraging Base-native assets to foster ecosystem growth.
• Risk Mitigation: cbBTC offers a simple and secure way to diversify and incorporate fully backed Bitcoin exposure.
• Enhanced User Experience: Bitcoin holders can seamlessly use cbBTC to borrow MAI, providing a highly efficient way to utilize their Bitcoin holdings within the DeFi space.

Quorum Standards

The option with the most votes will be adopted

Options

• Approve proposal
• Further discussions needed
• Abstain