Create sip-404.md

content/sips/sip-404.md

@@ -0,0 +1,47 @@
+---
+sip: 404
+title: Enable Native LP leverage
+network: Ethereum, Optimism, Base & Arbitrum
+status: Draft
+type: Governance
+author: Cavlier
+created: 2024-21-08
+---
+
+## Simple Summary
+
+Improve capital efficiency of providing liquidity to Synthetix V3, by enabling native leverage within Vaults.
+
+## Abstract
+
+Liquidity Providers are able to deposit a range of collateral types across Synthetix deployments, but are limited in the capital efficiency they can achieve. This proposal would enable a native levarage value, so that LPs could choose their desired level of rewards and risk.
+
+
+## Motivation
+
+Synthetix is powerful in that it is able to accept a wide range of assets as collateral. The only current avenue for LPs to increase their leverage and capital efficiency, is to deposit and mint a stablecoin on Arbitrum (and soon Ethereum). The lack of native leverage limits the yield on desposited collateral, and the current withdraw timeouts make for convoluted looping.
+
+## Specification
+
+TBC
+
+
+### Rationale
+Offering increased capital efficiency will attract more liquidity.
+
+
+### Technical Specification
+
+TBC
+
+### Test Cases
+
+Test cases will be added to the code base before release.
+
+### Configurable Values
+
+- Maximum leverage per collateral type
+
+## Copyright
+
+Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).