Summary
A proposal to:
- Increase cbBTC’s borrow cap on Aave’s V3 Base main instance.
cbBTC (Base)
cbBTC has reached 90% borrow cap utilization on Base, and its supply cap is at 4% capacity.
Borrow Distribution
The top cbBTC borrowers represent a significant portion of the market representing over 44% of the borrow demand. It also uses cbBTC as collateral to borrow cbBTC, making the liquidation risk of the position minimal. The rest of the positions are of very small size while using highly liquid collateral. None of the top positions represents a liquidation risk.
Overall, cbBTC represents 65% of the collateral value used to borrow cbBTC, while USDC represents an additional 21%.
Recommendation
Given the highly liquid and varied collateral being used to borrow cbBTC, we recommend increasing the borrow cap to 80 cbBTC. This increase is backed by Chaos Labs’ risk simulations, which consider the user’s behavior, on-chain liquidity, and price impact, ensuring that the higher cap does not introduce additional risk to the platform.
Specification
| Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Base | cbBTC | 5000 | - | 40 | 80 |
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