Gauntlet will move forward toward a Snapshot vote with these recommendations. After refreshing the latest market data, the analysis we posted late last year has not changed, and our recommendation stays the same: to lower the optimal utilization and raise slope 2 for USDT and to raise slope 2 and lower the reserve factor for TUSD.
USDT utilization has remained relatively high in the past few months, around 70%. While it hasn’t spiked near 100% again, the high utilization may signal short interest and the risk of users draining liquidity from the protocol.
TUSD utilization has been rising recently, with occasional spikes in utilization. While none of these spikes resulted in utilization staying above 50% through its “buffer zone” (utilization between the kink and full utilization), historical data suggests that a shock to supply or demand may cause utilization to stay high for dangerously long, as described in our original post above. Making recursive borrowing profitable sooner through lowering the reserve factor would help lower utilization when it surpasses the optimal.
Next Steps
- Targeting Snapshot vote on 1/16/2023