Converting Remaining BUSD in AF1.0 lending into USDT

Community Discussion & Proposal
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Background:

As part of the process to sunset BUSD from our platform due to Binance delisting, we have closed all the BUSD-pairs farming positions and delisted all BUSD farms as per AIP-25. However, as of January 30th 2024, there is still ~$9.0 Mn of BUSD remaining in the AF1.0 lending vault.

In this discussion thread, we are proposing to convert these remaining BUSD into USDT, deploy them into AF2.0, and allow for the depositors to claim them there.

Rationale:

We believe that these approach makes sense for several reasons

  • While Binance is still accepting BUSD deposits and will credit them with FDUSD, there is no guarantee how long the scheme will last and so there is a risk that BUSD will no longer be allowed for conversion.

  • BUSD on AF1.0 is not being productive and not adding value to the Alpaca Finance ecosystem at the moment.

Implementation:

The implementation will follow the steps below:

  1. We will upgrade the deposit contract for the BUSD vault on AF1.0 to allow for admin withdrawal.
  2. All withdrawn BUSD will be sent to Binance which would then be credited 1:1 to FDUSD.
  3. FDUSD will be swapped into USDT. As can be seen from the screenshot below, there is enough liquidity on this market to support our swap size without much slippage.

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**Note: As can be seen from he screenshot above, FDUSD trades close to 1:1 with relatively deep liquidity. In the actual implementation, we will set a minimum acceptable price (e.g., -0.2% to ensure users get reasonable conversion rates. **

  1. After the swap is completed, USDT will be witdrawn from Binance and deploy into the AF2.0 lending contract
  2. Users can then claim their ibUSDT anytime.
9 Likes
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Suggest we add a fair 1% brokerage fee to deal with this hassle.

The fee can be in part used to buyback Alpaca at market rate or distributed to governance holders

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I think it is a fair solution that possibly saves a lot of money to investors who are not aware to changes that are happening to BUSD.
Making the USDT available on AFV2 will greatly increase the stablecoin supply and might prompt users to deposit other coins as collateral in order to borrow it. It also may help raise the limits of BNB/USDT (and potentially other) AVs that are in demand on PCS and need to borrow more USDT now.

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4

The best way to save investors money👌🏻

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It seems common sense to me.

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This discussion topic is now created into an AIP. Any further discussions should be made on the new thread.

2 Likes