[NGV-06] List hMON as a Neverland Collateral and Borrowable Asset

Governance Governance Vote
1

[NGV-06] List hMON as a Neverland Collateral and Borrowable Asset


Vote

[NGV-06] List hMON as a Neverland Collateral and Borrowable Asset

Summary

This Governance Vote proposes adding hMON, also known as Holistic MON, as a new Neverland reserve asset with both collateral and borrowing enabled.

hMON is the tokenized form of shMonad’s zero-yield tranche, also known as the Degen Pool. Users deposit MON into the zero-yield tranche and receive hMON 1:1. The deposited MON enters shMonad’s normal staking flow, but staking rewards are not paid to the hMON holder. Instead, those rewards accrue to pooled shMON equity.

The objective of this proposal is to give hMON an immediate productive use case on Neverland while preserving a controlled risk posture at launch. hMON would be listed with capped supply, capped borrowing, isolation mode enabled, Chainlink-composed pricing, collateral parameters matching shMON, and a higher liquidation bonus to account for hMON-specific execution and liquidity risk.

If approved, Neverland would support hMON as both a collateral asset and borrowable asset once the Chainlink oracle path is live, reviewed, and ready for integration.

Background

Fastlane is preparing to launch hMON as part of the upcoming shMonad upgrade.

Today, shMonad includes a zero-yield Degen Pool. Users can deposit MON into this pool, but they do not receive a liquid token in return. The upgrade tokenizes this position as hMON, making the zero-yield tranche transferable and usable in DeFi without changing the underlying economics.

hMON should be understood as MON principal exposure with a different exit path than wMON. hMON does not unwrap directly into MON. Instead, a holder can either sell hMON directly where liquidity exists or convert hMON into shMON at the current shMON deposit rate. From there, the holder can exit through immediate shMON liquidity routes such as the shMonad atomic pool or secondary markets.

The proposed oracle path for hMON is:

hMON/USD = hMON-to-shMON conversion rate × shMON/USD

This allows hMON to be priced from shMonad protocol conversion math and the existing shMON oracle path, rather than relying on shallow hMON spot liquidity at launch.

The RFC requested that Neverland list hMON as a new reserve asset with both collateral and borrowing enabled once the Chainlink oracle path is live and the shMonad upgrade is complete. The RFC proposed that hMON launch with conservative risk controls, including capped supply, capped borrowing, isolation mode, Chainlink-composed pricing, and collateral parameters aligned with shMON.

Request for comments:

RFC-05: List hMON (Holistic MON) as Neverland Collateral

Proposal

This proposal asks Neverland governance to approve the listing of hMON as a new reserve asset with both collateral and borrowing enabled.

hMON is the tokenized form of shMonad’s zero-yield tranche.

When a user deposits MON into the zero-yield tranche:

  • The user receives hMON 1:1 against the deposited MON.
  • The MON enters shMonad’s normal staking flow.
  • Staking rewards from that MON are not credited to the hMON holder.
  • Those rewards accrue to pooled shMON equity.
  • The hMON holder can later convert hMON into shMON at the current deposit exchange rate.

Core hMON properties:

Property hMON
Name Holistic MON
Symbol hMON
Decimals 18
Standard ERC-20 plus EIP-2612 permit
Balance behavior Non-rebasing
Mint path Deposit MON into the zero-yield tranche
Conversion path Burn hMON / zero-yield balance and mint shMON
Direct MON redemption No direct hMON-to-MON path

The main hMON functions are:

interface IShMonadZeroYield {
    function depositToZeroYieldTranche(uint256 assets, address receiver)
        external
        payable;

    function convertZeroYieldTrancheToShares(uint256 assets, address receiver)
        external
        returns (uint256 shares);

    function previewDeposit(uint256 assets)
        external
        view
        returns (uint256 shares);

    function getZeroYieldToken()
        external
        view
        returns (address token);
}

Liquidators will have two practical exit routes:

  • Sell seized hMON directly into hMON liquidity where available.
  • Convert hMON into shMON through shMonad, then exit shMON through the atomic pool or existing DEX liquidity.

For Neverland risk purposes, the relevant liquidation routes are the immediate routes only: direct hMON liquidity, shMonad atomic liquidity, and external shMON DEX liquidity.

The proposed hMON oracle should use a Chainlink-composed path:

hMON/USD = hMON-to-shMON conversion quote × shMON/USD

The hMON-to-shMON leg can be quoted using:

uint256 shmonOut = IShMonad(shMonad).previewDeposit(1e18);

Then:

hMON/USD = shmonOut / 1e18 × shMON/USD

The oracle should read the view quote and should not use hMON DEX spot pricing as the primary source at launch.

Recommended oracle controls:

Control Recommendation
Primary price path Chainlink composed hMON-to-shMON × shMON/USD
hMON-to-shMON leg shMonad previewDeposit(1e18)
USD leg Chainlink shMON/USD
Staleness checks Required on Chainlink feed updates
Sanity bounds Required against expected MON/shMON behavior
DEX spot dependency Not required for primary pricing
Launch gate Listing should wait until the Chainlink path is live and reviewed

Suggested initial parameters:

Parameter Proposed launch value
Collateral enabled Yes
Borrowing enabled Yes
LTV 55%
Liquidation Threshold 60%
Liquidation Bonus 15%
Oracle Chainlink composed hMON-to-shMON × shMON/USD
Supply Cap 70MM shMON-equivalent, about 110MM hMON today
Borrow Cap 5MM shMON-equivalent, about 8MM hMON today
Isolation Mode Enabled at launch
E-Mode Disabled at launch

The 55% LTV and 60% liquidation threshold match shMON’s current Neverland collateral parameters.

The 15% liquidation bonus is proposed to compensate liquidators for hMON-specific execution, liquidity, and route complexity during the early market. Seized hMON may be sold directly into hMON liquidity where available, or converted into shMON before exiting through immediate shMON liquidity routes.

The supply cap should match shMON’s current Neverland supply cap in shMON-equivalent terms, not raw hMON token units. At the current hMON-to-shMON conversion rate, a 70MM shMON-equivalent cap is roughly 110MM hMON. The configured hMON unit cap should be calculated at listing using the live conversion rate.

Because shMON is not borrow-enabled today, hMON should launch with a separate borrow cap of 5MM shMON-equivalent, or roughly 8MM hMON at today’s rate. This gives the borrow market room to start while keeping utilization and liquidation risk contained.

Future supply cap or borrow cap increases should require a separate governance process after production performance, liquidity depth, oracle behavior, and liquidation routing have been observed.

Risk Considerations

hMON is economically simple, but it is still a new collateral and borrowable asset. Governance participants should consider the following risks before voting.

Smart contract risk

hMON depends on the shMonad upgrade and the hMON / zero-yield tranche implementation. The listing should not go live until the relevant shMonad upgrade is complete and the hMON audit has been finalized.

Oracle risk

The proposed oracle composes the hMON-to-shMON conversion quote with the Chainlink shMON/USD feed. This avoids relying on early hMON spot liquidity, but it introduces dependency on both the shMonad conversion quote and the shMON/USD oracle path. Staleness checks and sanity bounds should be required.

Liquidity risk

Liquidators may exit seized hMON by selling hMON directly where liquidity exists or by converting hMON into shMON and exiting through the shMonad atomic pool or external shMON DEX liquidity. During stressed conditions, direct hMON liquidity, shMON liquidity, and atomic pool liquidity may be constrained. The proposed supply cap, borrow cap, isolation mode, and 15% liquidation bonus are intended to help contain this risk at launch.

Closed-mode risk

If shMonad is closed, hMON transfers, approvals, and permits remain live, but new hMON minting and hMON-to-shMON conversion are blocked. This should be considered when evaluating liquidation assumptions and market risk.

MON market risk

hMON ultimately represents MON-denominated principal exposure. hMON collateral and borrowing risk should therefore be evaluated in the context of MON market volatility, liquidity, and liquidation demand.

Points-policy risk

Any Fastlane or shMonad points treatment is external to Neverland and should not be counted as collateral value. Neverland does not need to enforce shMonad points rules.

Parameter risk

The proposed initial configuration is intentionally controlled. However, hMON is a new asset, and governance should expect caps and parameters to be revisited only after production data is available.

Governance Approval

By voting in favor of this proposal, governance participants approve the addition of hMON as a Neverland reserve asset with the launch parameters described in this Governance Vote.

A successful vote would authorize Neverland contributors, core teams, risk partners, and relevant executors to complete the implementation required to list hMON, subject to the following launch conditions:

  • The shMonad upgrade supporting hMON is live.
  • The hMON audit is complete.
  • The Chainlink-composed hMON oracle path is live and reviewed.
  • The final configured hMON supply cap is calculated using the live hMON-to-shMON conversion rate at listing.
  • The listing is implemented with collateral enabled, borrowing enabled, isolation mode enabled, and E-Mode disabled.
  • The initial LTV, liquidation threshold, liquidation bonus, supply cap, and borrow cap match the approved parameters in this proposal unless a technical or risk review requires a strictly more conservative configuration.

Governance approval does not authorize any DUST incentive allocation or separate incentive program. Any future incentive request would need to be considered separately.

Voting Options

  • Option 1: Approve hMON Listing

    Approve listing hMON as a Neverland reserve asset with collateral enabled, borrowing enabled, the proposed Chainlink-composed oracle path, capped supply, capped borrowing, isolation mode enabled, E-Mode disabled, and the proposed initial risk parameters.

  • Option 2: Reject hMON Listing

    Do not approve listing hMON as a Neverland reserve asset at this time.

  • Abstain (Required)

Execution Considerations

If this Governance Vote passes, execution should proceed only after the required launch dependencies are complete.

Expected execution sequence:

  1. Complete the shMonad upgrade that introduces hMON.
  2. Finalize and publish the hMON audit.
  3. Confirm the hMON token address and relevant shMonad contract addresses.
  4. Confirm the Chainlink-composed hMON oracle path.
  5. Review oracle staleness checks, sanity bounds, and expected MON/shMON behavior.
  6. Calculate the final raw hMON supply cap and borrow cap using the live hMON-to-shMON conversion rate.
  7. Configure hMON as a Neverland reserve asset.
  8. Enable collateral.
  9. Enable borrowing.
  10. Enable isolation mode at launch.
  11. Disable E-Mode at launch.
  12. Apply the approved initial LTV, liquidation threshold, liquidation bonus, supply cap, and borrow cap.
  13. Monitor usage, liquidity, borrow demand, oracle behavior, and liquidation execution after launch.

The proposed initial supply cap is 70MM shMON-equivalent, approximately 110MM hMON today. The proposed initial borrow cap is 5MM shMON-equivalent, approximately 8MM hMON today. Both raw hMON caps should be calculated at listing using the live conversion rate.

Any future increase to hMON supply caps, borrow caps, collateral parameters, E-Mode eligibility, or other material risk settings should be handled through a separate governance process.

Closing Statement

hMON gives shMonad’s existing zero-yield Degen Pool a liquid ERC-20 form. It is non-rebasing, represents MON principal in the zero-yield tranche, and converts into shMON at the current deposit exchange rate.

Listing hMON on Neverland would give hMON holders the ability to borrow against their position, allow users to borrow hMON directly, and expand Neverland’s set of Monad-native collateral and borrow assets.

This proposal is intentionally controlled at launch: collateral enabled, borrowing enabled, capped supply, capped borrowing, isolation mode enabled, E-Mode disabled, Chainlink-composed pricing, shMON-matched LTV and liquidation threshold, and a higher liquidation bonus for hMON-specific execution risk.

Governance participants should evaluate whether the proposed launch configuration appropriately balances hMON utility, Neverland market growth, oracle readiness, liquidity depth, and liquidation risk.


References

1 Like
[RFC-05] List hMON (Holistic MON) as Neverland Collateral