This is great - I also welcome Chaos’s deep analysis here and err towards the 50% circulating supply caps for WETH and USDbC. This would still allow for growth of the protocol, while providing a path forward to balance the protocol with an eye towards supply/demand over the coming weeks/months.
As the original poster, I will resummarize what the proposal is, and will also move it to snapshot labs shortly and post the link in this thread too.
To re-summarize —
Background:
Seamless has grown to be a top TVL and user project on Base. The supply of liquid assets on the platform, such as major assets like ETH and USDbC, has grown significantly in this time to account for nearly 25% of total TVL on Base chain.
With this growth, the borrowing on the platform has long been at maximum capacity and unable to grow more due to the genesis borrow caps.
Though these borrow caps serve their purpose (conservative approach for safe liquidations, overall safety of the platform), Seamless appears to be ready for its next phase of growth and for an adjustment of the borrow caps.
Proposal:
With several months of operating history, the addition of Chaos Labs to the community (+ their risk monitoring expertise) and the growing robustness of the liquidator network, it makes sense to re-evaluate and increase the borrow caps across all existing Seamless markets.
Additionally, it is prudent to begin raising the borrow caps to enable more capital efficiency of the platform, and for the newly deposited liquidity to “do work” (generate fees) for the Protocol and enable more growth for the wider Base ecosystem.
The UPDATED proposal (with community inputs, especially Chaos’s deeper analysis) would be to set supply and borrow caps, specifically to:
| Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|
| USDbC | N/A | 66,000,000* | 400,000 | 5,400,000 |
| USDC | 200,000 | 2,700,000 | 150,000 | 2,500,000 |
| DAI | 100,000 | 1,000,000 | 50,000 | 900,000 |
| WETH | N/A | 27,500* | 254 | 2,000 |
| cbETH | 800 | 1,600 | 121 | 800 |
*these two parameters are set to a more aggresive stance than Chaos originally suggested, based on community feedback
NOTE: Chaos’s recommendations seemed to receive a warm reception from the community, with one slight adjustment with community input, which was setting the supply caps of WETH + USDbC to the more aggressive ceiling of 50% of circulating supply.
Next Steps:
Kick start the off-chain snapshot labs process - link to the temperature check will be shared as reply to this post within the next few hours
