Collateral
Choose a wide range of ERC20 tokens as collateral
In DIVA Protocol, collateral refers to the asset that is deposited into a contingent pool to back the value of the position tokens. The protocol offers support for a wide range of ERC20 tokens to serve as collateral, including popular options like DAI, USDC, USDT, WBTC, WETH, as well as interest-bearing tokens such as Compound's cDAI or wrapped staked ETH (wstETH).
To qualify as collateral, an ERC20 token must meet the following criteria:
- Decimal precision: The token's decimal precision must be between 6 and 18.
- No transfer fees: The token must not charge fees on transfers. This will result in a transaction revert when creating a pool. If transfer fees are activated after a pool has been created, adding liquidity will no longer be possible. It is important to highlight that the pool can still be settled.
- Non-rebasable: The token's balance in a holder's wallet should remain constant. That is, tokens like Ampleforth, Lido's (non-wrapped) staked ETH (stETH), or Aave's aTokens, which can alter the holder's balance, should not be used as collateral to prevent rendering a pool undercollateralized or locking any accrued yield/interest. When tokens with a flexible supply are considered as collateral, only tokens with a constant balance mechanism such as Compound's cToken or the wrapped version of Lido's staked ETH (wstETH) should be used. It's important to highlight that, unlike fee-on-transfer tokens, using rebasable tokens as collateral will NOT cause a transaction revert when creating a pool or adding liquidity.
Last modified 2mo ago