Summary
A proposal to:
- Increase GHO’s borrow caps on the Arbitrum V3 deployment.
Motivation
GHO (Arbitrum)
GHO has reached 98% of its supply cap while its borrow cap is 100% utilized.
Supply Distribution
The supply is fairly well distributed, with the largest supplier accounting for nearly 22.5% of the total supply.
Borrow Distribution
The borrow is concentrated on the top three accounts, with the first representing over 49% of the GHO borrowed.
All top three borrowers are looping by borrowing the same assets they deposit to farm ARB rewards.
The looping represents little to no risk to the protocol.
Recommendation
Given on-chain liquidity and user behavior, we recommend increasing the borrow cap. Since the majority of the demand comes from looping we do not recommend increasing the supply cap further to allow for more looping.
Specification
| Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Arbitrum | GHO | 10,000,000 | - | 4,500,000 | 9,000,000 |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0