Adding an asset

Each additional token slightly increases the gas cost of transactions permanently. These tokens must be integrated into the smart contract, which adds complexity and elevates costs.

Each token added to Tulia protocol as collateral heightens the protocol's risk of insolvency. From a financial standpoint, a token enabled as collateral can be viewed as an asset of the Tulia protocol, whereas the tokens borrowed are seen as the liabilities of the protocol. The tokens underlying these assets and liabilities often vary, with borrowers primarily opting for stablecoins, and collateral tokens being more volatile. Therefore, it is imperative that while incorporating new tokens, the Tulia Community considers:

• Only assets with the most robust risk profiles should be supported as collateral.

• Riskier assets should be enabled as collateral exclusively in Isolation mode.

• New assets with greater risk and lower liquidity should be considered for listing solely in Isolation mode (for both borrow and collateral use).

A centralised asset accepted as collateral exposes the protocol to centralisation risk. The single point of failure risks of underlying tokens flow into the Tulia Protocol.

Assets that have risk of manipulable oracles are listed as single borrow assets (i.e. if a user borrows said asset, they cannot borrow any other asset, known as Siloed assets).

Tokens only enabled for supplying and borrowing (i.e., not usable as collateral) present lower risk for the protocol. To remain solvent, these assets must exceed the liabilities borrowed from the protocol. Tokens which can only be used for borrowing should always be thoroughly backed by collateral assets (e.g., a user can supply DAI as collateral and borrow DAI in variable mode backed by DAI; however, this is not applicable for agEUR which cannot be used as collateral and must always be borrowed against more secure assets).

Diversifying liquidity across different tokens reduces risks through diversification benefits.

When integrating a token into Tulia, thorough analysis is required by the Tulia community to ensure that the asset brings more value than risk. Only tokens with a solid product and significant community backing should be taken into consideration. The asset risk methodology provides a structured approach to evaluate tokens’ risks to the protocol, and how to adjust asset parameters to lessen those risks.