Context & Motivation
Native USDC markets have reached almost full utilization on both the supply and borrow cap sides of the market.
In preparation for the next wave of USDC grants/rewards from Gauntlet - some community members feel it is prudent to discuss and enact supply and borrow cap changes to the USDC market to allow for further growth of the liquidity in these markets.
Given the recent passing of [GP-4] and [SIP-7] and the impending execution of [SIP-7] in just ~1-2 hours, it would be prudent for the community to discuss supply and borrow cap adjustments to the USDC market for the Guardian Multi-Sig to execute once the [SIP-7] payload is executed by the timelock.
In conjunction with advisory/consulting (offchain) of professional risk service providers, community contributors have crafted the following proposal.
Proposal:
Supply Caps
Native USDC
Raise from 8M to 16M
Borrow Caps
Native USDC
Raise from 6M to 12M
Next Steps
Look forward to further community thoughts. The Community Guardian Multisig will have the authority to execute post [SIP-7] timelock execution.
While there is sufficient liquidity available to support a 3x supply and borrow cap increase (24M and 18M, respectively), it is unclear whether the new USDC coming in would behave similarly to the current positions. As a result, we’d like to offer a conservative option (16M supply and 12M borrow) and an aggressive option (24M supply and 18M borrow). Our preference is to move forward with the conservative approach, observe, and increase the caps again at a later point in time.
Since caps have almost reached its limits, I believe that the DAO needs to increase them in order to meet users’ demand.
As for the numbers, I tend to start with the recommended scenario by @chaoslabs . We can indicate in the proposal that once conservative caps reach their limits, they will be increased in accordance with the aggressive scenario by the Guardians
I fully support this proposal! The markets are at their cap and Chaos is recommending an increase. Since SIP-7 is not passed and executed onchain, this cap increase can be done immediately by the Protocol Guardian through the risk steward, I support the immediate execution through this new mechanism. There is clear demand and time sensitivity due to the caps being at their limit already.
Actually, the original proposal has now been modified to suggest the conservative approach. The reason being that the Guardians have a maximum limit of increasing supply caps by 100%, as outlined by SIP-7 here
I would be in favor of the conservative limits as outlined above by @chaoslabs best to grow in a sustainable way, and feel a 2x increase is a great start. Thanks for the analysis! USDC is def a bluechip we want to allow users to interact with on Seamless given its adoption as of late.
