Summary
A proposal to:
- Increase USDS’s supply and cap on the Aave Core instance.
All increases are backed by Chaos Labs’ risk simulations, which consider user behavior, on-chain liquidity, and price impact, ensuring that higher caps do not introduce additional risk to the platform.
USDS (Ethereum Core)
The supply cap for USDS has reached 100% utilization while its borrow cap utilization has reached 7%.
Supply Distribution
Supply is somewhat concentrated, with the largest supplier depositing $99M of WETH and stablecoins against $130M USDS and $11M weETH. Given the correlation between these assets, this position is at lower risk of liquidation. The second largest supplier is looping the asset with itself.
Overall, USDC represents the majority of value borrowed against USDS collateral, again reducing the liquidation risk.
Recommendation
Given user behavior and on-chain liquidity (a 500M swap for USDC can be completed under 0.5% slippage), we recommend increasing the supply cap.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | USDS | 400,000,000 | 800,000,000 | 360,000,000 | - |
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