Discussion around future asset listings market structures

Governance
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Opening a thread for contributor and community discussion. Gauging interest in listing a few new assets on Tydro and wether a particular configuration Aave V3 or V4 suits any particular asset as per advice from users, risk managers, and other parties. Multiple options are available, and considerations around isolation, known counterparties, and interest rate models have come up with many users and clients in the past few months.

Tydro is looking to list the following assets in the near term: kHYPE (Kraken-wrapped Hyperliquid, in the same configuration in QC as kBTC (Introducing Kraken Wrapped Bitcoin)), xSPY (and other xStocks issued by Backed), syrupUSDC & syrupUSDG (Maple), and XAUt0 (Tether).

EtherFi’s market on Optimism has already shown strong demand for borrowing stablecoins against tokenized equities and gold, and deeper integration with partners to bring new borrow demand sources such as Kraken, third party interfaces, and native onchain users.

This conversation is aimed at getting user, risk manager, and community feedback on larger picture A subsequent post about Tydro Season 2 incentives will be posted shortly, with continued support from the Ink foundation and Aave. Stay tuned for further details.

Open discussion item: Tydro’s backend architecture for new markets. V3.7 is live and battle-tested, but isolating these new markets on it means either wrapping new stables or deploying separate pools — both have costs. V4 solves isolation natively with hub-and-spoke, but it’s newer and lands a bit later. Neither answer is obvious and both have their own set of pros and cons relative to the other.

Open questions for community: which of these assets (or others) do you actually want to borrow, what configurations are you interested in (isolation, semi isolation, cross margin, fixed rate/term or floating, etc) and would you rather have new markets live on V3 or a V4 spoke?

All takes welcome below, especially the critical ones.

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This is a tough question because Tydro launch is in the saddle-point between v3.7 and v4. In this context we also have Aave Horizon markets that are still not fully migrated to v4. However, it makes sense move forwards with v4 because it’s where Aave is going. We think the v4 is probably the best future for Tydro as it has more flexibility.

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From security perspective v3 or v4 look mostly like a risk question

v3.7 isolation mode is not real isolation, like isolated khype market still borrows from the same USDC suppliers, the debt ceiling just caps how much bad debt they can take. Real isolation on 3.7 means a separate instance, and that will prob. split liquidity.

v4 cleans up the model but not the risk. Spokes borrow from one shared hub, so a spoke bad debt still hits hub liquidity, up to the cap. The isolation is as strong as those limits and the hub contract itself, and that’s the newest code holding the most money in the system.

What I’d do is to list the assets with clear demand (like khype, xspy, etc..) on 3.7 isolated with tight ceilings now, and plan the v4 spoke once aave finishes their own migration and the hub has real TVL and time on it.

The bigger risk is not v3 vs v4 though, it’s oracles for assets that stop trading. xspy and xaut0 have closed hours, so liquidations run on stale prices and the whole gap hits at market open. syrupUSDC liquidations depend on maple’s withdrawal queue and there is no real DEX liquidity to sell into. Those need their own configs whichever version they land on, closed hours handling, extra LT/LTV headroom for weekend gaps, caps sized to what you can actually exit, etc..

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Agreed on your point about flexibility around future listings with v4 and have been discussing this with the Aave team

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@Pyro true, but when @Glen says “wrapping new stables” it means deploying a new USDC reserve in the pool that’ll only be used for this market (e.g. kHYPE<>USDC). So in that case we’d have 2 distinct USDC reserves on Tydro, one can’t contaminate the other. But still not ideal, technically speaking.

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I’d prioritize xSPY and XAUt0, especially under isolated markets.

Tokenized equities and gold are interesting collateral, but liquidity and oracle risk shouldn’t be allowed to spill over into the core markets.

If V4’s hub-and-spoke architecture can provide cleaner isolation without sacrificing capital efficiency, I’d lean toward V4 for these new assets.

Curious to see how the community weighs capital efficiency vs. risk isolation here.

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I’m fine with listing the proposed assets, but you should also include ETH. It’s one of the most widely used assets in DeFi. Even though ETH cannot currently be used as collateral on the current version of Tydro, it still remains the largest isolated market in tydro.

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I think we should list the XStocks-wrapped stocks.