Summary
A proposal to increase caps for the following assets on Metis:
- m.USDC - Supply and Borrow Cap
- m.USDT - Supply and Borrow Cap
- DAI - Supply and Borrow Cap
- WETH - Supply and Borrow Cap
- METIS - Supply Cap
Motivation
Several assets on Metis have reached high supply and borrow levels. The recommendations below were made utilizing Chaos’ supply and borrow cap methodologies and after analyzing user positions for each asset.
Stablecoins
The following supply and borrow caps utilization have been reached:
- m.USDC - 99% supply cap, 79% borrow cap
- m.USDT - 100% supply cap, 96% borrow cap
- m.DAI - 89% supply cap, 76% borrow cap
Utilizing our stress testing framework, we do not observe VaR while increasing the caps for these assets, as the main use case observed is looping the same asset to earn incentives. Given this, we recommend capping the supply caps of stablecoins to 75% of their respective on-chain circulating supply.
WETH:
The supply cap for WETH on Metis V3 is currently at 100% utilization, with the borrow cap sitting at 84% utilized.
Considering the liquidity and the overall usage on Metis we recommend doubling the supply and borrow cap and setting them at 1,200 and 720, respectively.
Borrow Distribution:
METIS
The supply cap for METIS on Metis V3 is currently at 85% utilization.
As Metis is listed as a non-collateral asset, we recommend setting the supply cap to 600k METIS. As there is a low demand for borrowing METIS, we do not recommend increasing the cap at this time.
Specification
| Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Metis | m.USDC | 10,000,000 | 14,500,000 | 9,000,000 | 13,000,000 |
| Metis | m.USDT | 8,000,000 | 12,000,000 | 7,200,000 | 11,000,000 |
| Metis | m.DAI | 1,100,000 | 1,240,000 | 950,000 | 1,110,000 |
| Metis | WETH | 600 | 1,200 | 360 | 720 |
| Metis | METIS | 400,000 | 600,000 | 32,000 | No Change |
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