Summary
A proposal to:
- Increase cbBTC’s borrow cap on Aave V3’s Ethereum - Core instance
cbBTC (Ethereum-Main)
cbBTC has reached 99% borrow cap utilization and 64% supply cap utilization; its utilization rate is 4.3%.
Borrow Distribution
Borrows are somewhat concentrated, with the largest user borrowing 150 cbBTC out of a total of 358 cbBTC. This borrower has been actively managing their position, increasing their cbBTC borrows on December 3. The position’s active management reduces liquidation risk.
USDS and WBTC are the two most popular collateral assets against cbBTC, with the latter presenting very little risk because of the assets’ correlation and the former being very liquid, making any potential liquidations low risk.
Liquidity
cbBTC’s liquidity paired with WBTC has improved significantly since the start of November and is sufficient to support a borrow cap increase.
Recommendation
Given user behavior and on-chain liquidity, we recommend doubling the borrow cap. This increase is backed by Chaos Labs’ risk simulations, which consider user behavior, on-chain liquidity, and price impact, ensuring that the higher cap does not introduce additional risk to the platform.
Specification
| Chain | Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|---|
| Ethereum | Main | cbBTC | 13,000 | - | 360 | 720 |
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