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

Governance Request for Comment
1

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

Summary

Fastlane is preparing to launch hMON as part of the upcoming shMonad upgrade. This RFC asks Neverland to list hMON as a new reserve asset, with both collateral and borrowing enabled once the Chainlink oracle path is live and shMonad is upgraded.

hMON tokenizes the existing shMonad Degen Pool. Users deposit MON into the zero-yield tranche and receive hMON 1:1. That MON is still staked through shMonad, but the staking rewards are not paid to the hMON holder. Instead, those rewards are donated into the pooled shMON exchange rate.

The easiest way to think about hMON is that it is MON principal exposure with a different exit path than wMON. hMON does not unwrap directly to MON. A holder can sell hMON directly where liquidity exists, or convert hMON into shMON at the current shMON deposit rate and then exit through immediate liquidity routes such as the shMonad atomic pool or secondary markets.

For pricing, the proposed Chainlink path is:

hMON/USD = hMON->shMON conversion rate x shMON/USD

This avoids depending on shallow hMON spot liquidity at launch. The oracle can read shMonad’s on-chain conversion quote and compose it with the existing shMON/USD oracle path.

The initial listing should match Neverland’s shMON LTV, liquidation threshold, and liquidation bonus.

Motivation

The Degen Pool already exists in shMonad today, but it is not liquid. Users deposit MON, receive no token back, and donate the staking yield to shMON holders.

The upgrade changes that by tokenizing the position as hMON. That makes the zero-yield tranche transferable and usable in DeFi without changing the underlying economics. hMON holders keep the MON principal exposure. shMON holders continue to receive the donated yield.

Listing hMON on Neverland would give the asset an immediate productive use case:

  1. hMON holders can borrow against their position without first converting into shMON.
  2. Users can borrow hMON directly when they want zero-yield tranche exposure.
  3. Neverland gets a Monad-native collateral asset with a clean on-chain pricing route.
  4. More hMON utility can make the zero-yield tranche more useful, which supports the shMON yield profile.

There is also a points angle, but it should stay separate from Neverland risk decisions. Fastlane points rules live on the shMonad points page, and 10x exposure only applies when hMON is deployed into qualifying DeFi integrations. Neverland does not need to enforce those rules, but a Neverland listing would be one of the more important venues for hMON utility.

Protocol and Collateral Details

hMON is the tokenized form of shMonad’s zero-yield tranche, also known as the Degen Pool.

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

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

Core token 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:

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

Atomic unstaking is instant when liquidity is available, but it charges a utilization-based fee. For Neverland risk purposes, the relevant liquidation routes are the immediate routes only: direct hMON liquidity, shMonad atomic liquidity, and external shMON DEX liquidity.

Launch Liquidity and Initial hMON Float

The shMonad upgrade tokenizes the current zero-yield Degen Pool into hMON. As of the June 15, 2026 on-chain snapshot at block 81,486,630, roughly 20.8MM hMON will become available once the upgrade is live.

There is also existing instant liquidity for the shMON leg after conversion. The same snapshot shows roughly 1.3MM MON available in the shMonad atomic unstaking pool.

Current shMON pool liquidity across Uniswap, PancakeSwap, Balancer, and Curve totals approximately $774k. This is aggregate pool TVL, not guaranteed liquidation capacity at a fixed slippage. It is still relevant because liquidators have more than one immediate route after converting seized hMON into shMON.

Fastlane also plans to incentivize two direct hMON liquidity pools with PancakeSwap and Balancer. Once those pools are live, liquidators can choose between selling hMON directly or converting hMON into shMON and using the existing shMON liquidity stack. That gives the market two liquidation paths instead of relying only on the hMON → shMON conversion route.

Oracle Path

The proposed Chainlink oracle composes two pieces:

  1. The hMON-to-shMON conversion quote from shMonad.
  2. The Chainlink shMON/USD feed.

Because 1 hMON represents 1 MON in the zero-yield tranche, the hMON-to-shMON leg can be quoted with:

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

Then:

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

The state-changing conversion function, convertZeroYieldTrancheToShares(uint256 assets, address receiver), uses the same deposit-rate math. The oracle should read the view quote and should not use hMON DEX spot pricing as the primary source.

Recommended oracle controls:

Control Recommendation
Primary price path Chainlink composed hMON->shMON x shMON/USD
hMON->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

This is the cleanest path for launch because it prices hMON from protocol conversion math and the existing shMON oracle, rather than from early hMON market depth.

Risk and Safety Considerations

hMON is simple economically, but it is still a new collateral asset. The main risks Neverland should underwrite are:

  1. shMonad and hMON smart contract risk.
  2. Oracle risk across both the shMonad conversion quote and the shMON/USD feed.
  3. Liquidity risk if liquidators need to sell hMON directly, or convert hMON into shMON and then exit during stressed conditions.
  4. 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.
  5. MON market risk, since hMON ultimately represents MON-denominated principal.
  6. Points-policy risk, since points treatment is external to Neverland and should not be counted as collateral value.

Those risks are why this RFC proposes capped supply, capped borrowing, isolation at launch, and collateral parameters that match shMON.

Proposed Collateral Parameters

hMON should launch as both collateral-enabled and borrow-enabled. Borrowing matters because some users will want hMON exposure without sourcing spot liquidity, and because a borrow market gives the asset more utility than a collateral-only listing.

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->shMON x 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 difference is liquidation execution: seized hMON depends on direct hMON liquidity or the hMON → shMON → immediate exit route. The 15% liquidation bonus compensates liquidators for taking that additional route, liquidity, and execution risk during the early market.

The supply cap should match shMON’s current Neverland supply cap in shMON-equivalent terms, not raw token units. At the current hMON → 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. shMON is not borrow-enabled today, so hMON should launch with a separate borrow cap of 5MM shMON-equivalent, or roughly 8MM hMON at today’s rate. That gives the borrow market room to start while keeping utilization and liquidation risk contained until direct hMON liquidity is live and tested.

The supply cap can be raised later through governance after:

  1. The Chainlink oracle path has run in production.
  2. hMON supply distribution is easier to observe.
  3. Liquidators have tested direct hMON exits and the hMON → shMON → atomic MON / DEX exit path.
  4. Direct hMON liquidity and shMON liquidity are deep enough to support larger liquidations.

Fastlane views these as starting parameters. Neverland and its risk partners should make the final call based on current liquidity, volatility, liquidation capacity, oracle implementation, and protocol risk.

DUST Incentive Request

Fastlane is also asking Neverland to consider a DUST incentive allocation for hMON once the oracle is live and the market is enabled.

The goal is to seed the market, make hMON visible to Neverland users, support early borrow demand, and help establish liquidator familiarity with the asset.

Exact DUST sizing and duration should be decided by Neverland and veDUST governance. Fastlane can coordinate separate shMonad points messaging, but Fastlane points and Neverland DUST incentives should be treated as separate programs.

Conclusion

hMON gives the existing shMonad 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.

The requested Neverland listing is intentionally controlled: collateral enabled, borrowing enabled, capped supply, capped borrowing, isolation at launch, Chainlink-composed pricing, shMON-matched LTV and liquidation threshold, and a higher liquidation bonus for hMON-specific execution risk.

If the community is aligned on the oracle path and initial risk settings, this RFC can move toward a Neverland Governance Vote.

References

2

Fully support this RFC. As a user currently depositing MON in the shMonad Degen Pool, having hMON listed as collateral on Neverland would be huge. It gives us great capital efficiency without forcing us to leave the pool or stop earning points. Let’s make it happen

3

I have several hundred thousand mon in that degen pool. The reason being is the 10x shmonad points. I’m trying to understand what benefit there would be using it (hMON) in DeFi, other than dust rewards. Does Fastlane plan to offer additional points to degen or hMon holder that use it in DeFi? We are already getting 10x, . It’s unclear, Will that be increased for using it in DeFi? If so, that will likely create significant hMON liquidity, if not, I don’t really see the point.

Fastlane has been hinting at a big upcoming announcement recently, so I assume this is it.

Fastlane wants this to be both a collateral and borrowable position. That’s confusing to me, as that is not the case for other liquid staking tokens. I’m trying to see you. What the big benefit is to degen contributors, if it is, just dust rewards. If it is, just dust rewards, what is the benefit to Neverland for even offering this as a borrowable and collateral asset?

Maybe Neverland should leverage this opportunity we’re giving Fastlane, and encourage them to offer a multiplier on regular shmonad deposited here as collateral :man_shrugging:t3:

I’ll admit.. I really did quickly skim this. But I do plan on reading it in depth later… lot of questions and uncertainty right now but I do like the idea of some type of collaboration..

2 Likes
4

I don’t have any significant concerns with this RFC. I’m glad Fastlane is offering a token to represent the current degen pool, which I understand is around 21M MON? Am I correct in assuming that the exchange rate for hMON and shMON will be 1:1?

1 Like
6

Actually now that I think about it, hMON should have the same price as MON, so the exchange rate should be the current MON/shMON exchange rate. Sorry about the confusion.

7

Thanks for the q’s

  1. While this isn’t necessarily related to Neverland, we do plan on offering points incentives for hMON (exact amount TBD). Also in general, the main benefit for degen pool users is gaining liquidity that degen pool users don’t currently have, allowing them to use that liquidity across Monad defi like (hopefully!) Neverland.
  2. hMON is not a liquid staking token since it doesn’t earn yield, its more equivalent to wMON but it also earns fastlane points.
  3. making it borrowable would unlock interesting vault and looping strategies. you could, for example, deposit shMON, borrow hMON, convert hMON to shMON and loop it again etc

let me know if anything is unclear!

4 Likes
8

Yea exactly. hMON is 1:1 with MON and then its whatever the exchange rate is with shMON.

3 Likes
9

I don’t see any problem with listing hMON as Neverland collateral.
shMON-hMON loop is certainly effective, and while the risks are the same as with existing shMON, gMON, and sMON, it seems to improve liquidity.

1 Like
10

One of the hardest things to explain to a TradFi Normie these days would be that saying MON/SHMON is not an actual joke.

That said, I don’t hold MON or any sort of MON derivatives, so definitely Abstain for me on this one. Quorum fodder it is.

11

Dust Incentives by Neverland: No. By Fastlane: Yes. They could buy some :slight_smile:

2 Likes
12

I’d support this. Have had $$ in the Fastlane Degen pool, and understand how it works. Although not exactly the same, I view it as essentially the same risk profile as shMON. Decent growth opportunity for Neverland (and Fastlane).

1 Like
13

I personally don’t use Fastlane, so perhaps help me (and others) understand the purpose of this zero yield tranche. As I understand it, users deposit their MON, give up its staking yield which goes to boost shMON stakers instead, and essentially end up with a position no different from holding spot, except you’re now illiquid and exposed to smart contract risk.

So hMON is introduced to make this position liquid, but it still doesn’t have yield (or any productive utility). But having it be able to be used in Neverland, gives users a way to borrow it and loop via withdrawing it to shMON, but in order to repay the loan, users would need to either deposit more MON in the zero yield degen pool to get hMON, or buy hMON if there’s spot liquidity.

What I’m trying to understand, is why would anyone take on more risk than holding spot by depositing into the degen pool, and why would anyone want exposure to the zero yield tranche? Seems like I could choose to hold spot or stake for shMON than go through extra steps and extra risk for hMON.

1 Like
15

In seriousness, the only use of this is to allow the continuous generation of points of perhaps a large stash of degen pool hMON, while borrowing WMON against it to either loop or do something else that generates yield. Given there are some users who do care about their points program, it seems like a legitimate use case.

16

That makes sense.. just looking at it that way, it creates a serious point harvesting strategy! I don’t a lot of shmon on Neverland because of the 1x point multiplier, but this alone would certain lead me to A. Contribute nore to degen pool, B. Loop the hell out of it :wink:

Question, So basically, borrowing hMON would be no different than directly contributing to the degen pool?

1 Like
17

I do wonder how they will deal with the points related to both liquid and borrowed tokens. I assume they will accrue points based on where the tokens are, but once you have borrowed tokens in the mix, your supply of HMON will increase through leverage (while the liability/debt just stays on the Neverland balance sheet). Are they really going to double count them if a user decides to resupply them to Neverland? Could this lead to crazy loops of 100X points?

18

I’m cool with it if Neverland gets paid from point farmers. Just trying to understand the asset here because its purpose isn’t stated in the RFC and the Fastlane UI literally states:

Although they don’t understand why any reasonable person would intentionally give up yield, shMonad stakeholders are very appreciative of the noble sacrifice made by degens.

3 Likes
19

Correct, contributing to the degen pool on Fastlane does result in zero yield. My understanding is that whatever yield the depositor is sacrificing instead goes towards increasing the APY of shMON for all Fastlane stickers. For the sacrifice, they reward you with a 10x point multiplier, their highest available.

It would be the most effective way to earn Fastlane points. Looping hMON would be the ultimate points-farming strategy across all of Monad. I believe this could bring *significant* capital to Neverland. Fastlane is the largest LSP on Monad with a huge following. Imagine how many Fastlane stakers would be introduced to Neverland for the first time, likely increasing Neverland’s TVL, stealing TVL from Curvance. That alone justifies awarding $DUST to loans and borrows.

Kintzu has a similar degen pool that rewards a far smaller multiplier of points. Unlike Kintzu, when contributing to the Fastlane degen, nothing is burned or lost. You can exit the degen pool at any time; all Monad is returned to your wallet.

After thinking about it more, I see this as a win-win for both protocols and a no-brainer. I do hope Neverland considers the Dust reward for lending and depositing hMON, which will only attract more Fastlane users.

3 Likes
20

Having received a significant amount of $$ from Aprioi’s points based program, for anyone who stakes Monad, this most certainly is a huge deal. I understand Neverland does not like points-based airdrops for various reasons, understandably so. But for top shmon stakers, the APY from these airdrops is significant

1 Like
21

I’ve been staking with FastLane since day one of mainnet and, subjectively, I consider it the best place for MON.
Listing hMON seems like a solid idea to me, it’s backed by a reputable protocol, has an established user base, and already commands a respectable share of TVL within the Monad ecosystem. So I’m in favor of the listing.
However, I’m concerned about allocating DUST incentives to this market. It feels like users running looping strategies here will simply maximize their FastLane points while being subsidized only by DUST emissions.
At this stage, there may be more impactful ways to deploy additional DUST incentives, for example, encouraging borrowing activity in markets such as USDC or AUSD.

1 Like
22

well i guess in my opinion fastlane is trusted bbut about the technology they are bringing & what benefits they provide is still unclear specially for me..