[ARFC] - Chaos Labs Risk Stewards - Increase Borrow Caps on V3 Metis, Ethereum - 10.17.2023

Governance
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Summary

A proposal to increase:

Ethereum

  • RPL - Borrow Cap

Metis

  • METIS - borrow cap

Motivation

The recommendations below were made utilizing Chaos’ supply and borrow cap methodologies and after analyzing user positions for each asset.

Ethereum

RPL

The borrow cap for RPL on Ethereum V3 is currently at 100% utilization.

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When examining borrower activity, we have observed that borrowers primarily borrow RPL tokens to engage in staking within the Rocket Pool ecosystem. It is essential to note that the liquidity levels on dexes are currently relatively limited. As a result, we recommend a 50% increase in the borrow cap, elevating it from 160,000 to 240,000 RPL tokens.

Metis

METIS

The borrow cap for METIS on Metis V3 is currently at 100% utilization.

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Utilizing our borrow cap methodology, we do not observe any additional risk when increasing the borrow cap for METIS. We recommend doubling the borrow cap to 16K.

Specification

Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Ethereum RPL 840,000 No Change 160,000 240,000
Metis METIS 360,000 No Change 8,000 16,000

Next Steps

Once we receive feedback from @Gauntlet on the above recommendations, we will move forward to implement these updates via the Risk Steward process.

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Gauntlet support the recommended cap increases.

We also recommend to increase

  • USDC supply cap on Metis from 4m to 6m, given USDC supply cap utilization is at 100%.
  • USDT supply cap on Metis from 4m to 5m, given USDT supply cap utilization is at 100%.
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We’ve prepared the payload to be executed via the Risk Steward process for this proposal, including USDC and USDT cap increases.

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The updates have been executed via Risk Steward.

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@Gauntlet @ChaosLabs
Thanks for increasing borrow and supply caps on Metis.
I just checked the market and could see that supply caps for USDC, USDT, DAI, WETH are again at 100%.
Also borrow caps for USDC & USDT are at 100& 98%.

Is there any specific reason for increasing the supply and borrow caps in such small steps given that these little increases are filled in under 24h?

I think its pretty clear there is demand and we are missing on fees if only increasing in these small steps.

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