💸ETH Pegged CDP Documentation

Introduction

Overview of ShezETH:

ShezETH is a decentralized, ETH-pegged derivative issued within the Shezmu Oasis platform. It allows users to leverage their Ethereum-based assets by minting ShezETH against them. ShezETH is designed to facilitate liquidity and leverage without the traditional risks of liquidation found in other lending platforms.

Purpose and Function:

The primary function of ShezETH is to enable users to leverage their Ethereum and Ethereum-related assets in a manner that closely tracks the value of ETH, reducing the typical liquidation risks due to the pegged nature of ShezETH. This allows for safer leverage in volatile markets.

How it Works:

Depositing Collateral:

Users can deposit ETH or ETH-related yield-bearing assets as collateral to mint ShezETH. This includes staked versions of Ethereum like wstETH from Lido or other ETH derivatives that might accrue additional yield over time.

Minting ShezETH:

After depositing suitable collateral, users can mint ShezETH up to a certain percentage of their collateral's value, determined by the asset's risk parameters and the platform's loan-to-value (LTV) ratio.

Interest Rates:

ShezETH carries a nominal interest rate, primarily to manage the protocol's economic stability rather than profit from loans. This rate is typically lower than those found in traditional borrowing due to the minimized risk of liquidation.

Collateral Types Supported:

Accepted Collateral:

- Ethereum (ETH)

- Wrapped Staked Ethereum (wstETH)

- EtherFi’s weETH

- Other approved Ethereum-based assets that maintain a value pegged or closely related to ETH.

Risk Parameters:

Each collateral type is assessed for its risk, volatility, and market liquidity to determine its LTV ratios, interest rates, and liquidation thresholds, which are set to ensure minimal risk of actual liquidation.

Risk Management:

Liquidation Mechanisms:

Due to ShezETH’s unique structure that closely follows the value of ETH, the traditional liquidation process is rarely needed. However, in extreme cases where the collateral value severely drops beyond recoverable thresholds, automated mechanisms adjust holdings to ensure platform stability.

Automated Rebalancing:

In situations where the market value of the collateral significantly changes, the platform may prompt users to adjust their holdings to avoid any potential risk automatically.

Collateralization Ratios:

Ensuring a buffer over and above the ETH price allows ShezETH to maintain its peg closely, even in volatile market conditions.

User Guide:

Creating an ETH Pegged CDP:

1. Access the Shezmu Oasis platform and connect your wallet.

2. Choose the collateral you wish to deposit.

3. Specify the amount of collateral and initiate the deposit.

4. Mint ShezETH according to the permissible LTV ratio.

Managing Your Position:

- Regular monitoring and rebalancing are advised to leverage fluctuations in ETH’s price.

- Users may add additional collateral or mint more ShezETH as per prevailing market conditions.

Smart Contracts:

Contract Addresses: 0x63a0964A36c34E81959da5894ad888800e17405b

- ShezETH Token:

Key Functions:

- depositETH(uint amount)

- withdrawETH(uint amount)

- mintShezETH(uint amount)

- redeemShezETH(uint amount)

Security and Audits:

Platform Security:

Shezmu Oasis adheres to strict security protocols, including regular audits, to ensure the safety and integrity of user assets and data.

Transparency and Audits:

Complete audit reports are available to the public to maintain transparency and build trust within the community.

FAQ:

Q: What are the advantages of using ShezETH over traditional ETH loans?

A: ShezETH minimizes the risk of liquidation due to its pegged structure and provides a way to leverage ETH with less risk during volatile market conditions.

Q: Can I use ShezETH for transactions outside the Oasis platform?

A: Yes, ShezETH can be used for transactions and trades in the wider DeFi ecosystem where it is accepted.

Q: How is the peg maintained during market turbulence?

A: Through careful collateral management and automated rebalancing to ensure the value of ShezETH remains closely aligned with ETH.

Summation:

This documentation elaborates on the functionalities, operations, and safety measures of the ShezETH CDP within the Shezmu Oasis, offering a novel way to leverage ETH with reduced risk and enhanced stability.