[ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Gnosis V3 - 08.29.2024

Summary

A proposal to:

  • Increase USDC.e’s supply cap on Aave V3 Gnosis deployment.

Motivation

USDC.e

USDC.e has reached 100% supply cap utilization on Gnosis, and its borrow cap is at 41% capacity.

image - 2024-08-30T003217.691

image - 2024-08-30T003220.579

Supply Distribution

A single user supplies the entire USDC.e supply. This user has no borrow positions open, so there is no liquidation risk.

image - 2024-08-30T003224.353

The assets borrowed against USDC.e represent an insignificant amount.

image - 2024-08-30T003227.802

Borrow Distribution

Out of the top 10 borrowers, 8 borrow USDC.e against highly correlated assets (sDAI, USDC), where liquidation risk is highly reduced. The remaining 2 positions use ETH-correlated collateral and have respective health scores of 1.15 and 1.45.

image - 2024-08-30T003230.939

Recommendation

Given the on-chain liquidity and users’ behavior, we recommend increasing the supply cap to 3,000,000 USDC.e

Specification

Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Gnosis USDC.e 1,500,000 3,000,000 1,400,000 1,400,00

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

The transaction has been executed successfully