Gauntlet supports the wstETH supply cap increase to 5000 and the sDAI supply cap increase to 3m.
We’ve stated in our original analysis of Gnosis that the biggest challenge is limited nonstable-stablecoin liquidity. While liquidity has increased via the wstETH-sDAI pool, a market sell of ~250 wstETH into stables via this wstETH-sDAI pool as well as the wstETH-staBAL pool incurs slippage of liquidation penalty ~6%.
As a result, we recommend more cautiously increasing caps for WXDAI, USDC, and EURe to balance weaker liquidity between stable-nonstables, facilitating recursive LST strategies, and stablecoin demand.
Given lower usages of xDAI, USDC, EURe
- xDAI supply cap is at 66% usage, borrow cap at 53% usage
- USDC supply cap is at 60% usage, borrow cap at 33% usage
- EURe supply cap is at 50% usage, borrow cap is at 27% usage
We recommend the following increases.
| Chain | Asset | Cap | Current | Recommended |
|---|---|---|---|---|
| Gnosis | wstETH | Supply | 4000 | 5000 |
| Gnosis | sDAI | Supply | 1.5m | 3m |
| Gnosis | xDAI | Supply | 1.5m | 2.3m |
| Gnosis | xDAI | Borrow | 1.5m | 2.3m |
| Gnosis | USDC | Supply | 1m | 1.5m |
| Gnosis | USDC | Borrow | 1m | 1.5m |
| Gnosis | EURe | Supply | 500k | 750k |
| Gnosis | EURe | Borrow | 500k | 750k |