Gauntlet recommendation on fUSDC
fUSDC represents claims to USDC deposits on Flux Finance, a Compound v2 fork where the only acceptable collateral is OUSG, a tokenzied implementation of short term US Treasuries that directly invests in the ETF iShares SHV. fUSDC is analagous to cUSDC on Compound v2. That being said, Gauntlet cannot quantify the above RWA risk; the below parameters are determined from the on chain characteristics of fUSDC only.
We do not recommend setting fUSDC in isolation mode, since this could prevent the natural behavior of fUSDC collateral from evolving without significantly reducing risk.
| Risk Parameter | Gauntlet Rec |
|---|---|
| Isolation Mode | NO |
| Enable Borrow | NO |
| Enable Collateral | YES |
| Borrowable in Isolation | NO |
| Loan To Value | 74% |
| Liquidation Threshold | 76% |
| Liquidation Bonus | 4.5% |
| Reserve Factor | 10% |
| Liquidation Protocol Fee | 20% |
| Borrow Cap* | N/A |
| Supply Cap* | 270M ($5.4M) |
| Debt Ceiling | N/A |
| Base | 0% |
| Slope1 | 4% |
| Uoptimal | 90% |
| Slope2 | 60% |
*1 USDC = 49.4 fUSDC
Isolation Mode
We do not recommend setting fUSDC in isolation mode, since this could prevent the natural behavior of fUSDC collateral from evolving without significantly reducing risk.
LTV, LT, LB, RF, LPF, IR
As stated above, fUSDC represents claims to USDC deposits on Flux Finance. Utilization for USDC (as well as USDT and DAI) on Flux all hover at the kink of 90%. fUSDC is directly convertible to USDC via Flux Finance in normal situations (when USDC utilization on Flux Finance < 1). We recommend using the same LTV, LT, LB, RF, LPF, and IR curve parameters (Slope 1, Uopt, Slope 2) as USDC.
Supply Cap
fUSDC is unique in that it has no external liquidity and its only exit is to be redeemed for USDC on Flux Finance. We recommend initializing supply cap at 25% of the circulating supply (~$22M has been minted on Flux Finance), and will monitor usage and growth before recommending subsequent increases.
Next steps
Should community approve the snapshot vote to list fUSDC, Gauntlet will follow up with all the parameters for next steps.