Summary:
The proposal aims to update sUSDe oracle for USDp on HyperEVM from RedStone to Chainlink.
Rationale:
Following PIP-51, USDp & the Parallelizer module (+ Savings, etc.) have been launched on HyperEVM.
Among the assets allowed for minting and burning USDp, sUSDe is one of them. At the time of the proposal in June, the most reliable price feed was Redstone’s fundamental sUSDe/USD. This price feed tracks the fundamental (redemption) value of sUSDe relative to USD. However, in order to unstake sUSDe and receive USDe, there is a 7-day cooldown period. This means that sUSDe can trade on secondary markets at a price lower than its fundamental price.
sUSDe is currently trading on secondary markets at around -1.5% of its fundamental value. However, the Parallelizer modulates the price of sUSDe to +1.5% of its current value, tracking its fundamental value rather than its value on the secondary market. This creates arbitrage opportunities such as:
- Swap USDC → sUSDe
- Mint sUSDe → USDp
- Burn USDp → USDe
- Swap USDe → USDC
These arbitrage opportunities have been used for a few hours. Although this does not pose a risk to the protocol in the very short term, the price feed currently in use creates a risk for the protocol because it does not track the real value of sUSDe at the current time. This could encourage sUSDe holders who want to sell at the best price to sell to the Parallel Protocol.
Since Parallel’s initial deployment on HyperEVM in July, Chainlink has deployed a market price feed for sUSDe/USD (not fundamental). We therefore propose to update the current price feed to this one.
As a precautionary measure, the emergency guardians will pause the mint of USDp using sUSDe on HyperEVM in the next few hours, which is classified as a Tier 2 issue. If the proposal is approved, the price feed will be updated and mint using sUSDe resumed.
Means:
- Human Resources: Multisig signers will need to sign transactions to execute the proposal.
- Treasury Resources: No treasury costs.
Technical implementation:
On HyperEVM:
- In the ParallelizerUSDp contract, in the SettersGovernor facet, call the ‘setOracle’ function with these parameters:
- collateral: 0x211Cc4DD073734dA055fbF44a2b4667d5E5fE5d2 (sUSDe)
- oracleConfig: 0xff8d73F413f0093a14190A987883B5101d7855Dd (sUSDe/USD Chainlink market price feed)
Voting options:
- For the Update of sUSDe Oracle for USDp on HyperEVM
- Against / Rework the Proposal
- Abstain
Sentiment poll:
- For the Update of sUSDe Oracle for USDp on HyperEVM
- Against/Rework the proposal
- Abstain
Author(s): Cooper Labs