Overview
A proposal to:
- Increase supply and borrow caps for USDC
The recommendations below were made utilizing Chaos’ supply and borrow cap methodologies and after analyzing user positions for each asset.
Analysis
The supply cap for USDC on Base V3 is currently at 86% utilization, while the borrow cap utilization stands at 99%.
Supply & Borrow Distribution
As observed in the previous instance of cap adjustments, the primary entity supplying and borrowing USDC, alongside WETH and USDbC, remains the same single wallet. This scenario does not signal an increased risk in elevating the supply and borrow caps.
Additionally, we have observed sufficient liquidity of USDC on Base to support our recommendation to increase the supply and borrow caps.
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.
Recommendations
Conservative (Recommended)
| Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|
| USDC | 8,000,000 | 16,000,000 | 6,000,000 | 12,000,000 |
Aggressive
| Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|
| USDC | 8,000,000 | 24,000,000 | 6,000,000 | 18,000,000 |