Summary
Chaos Labs supports the proposal to migrate USDC and USDT from the existing GHO Stability Module on Ethereum into new stataToken GSMs.
Analysis
We note that this proposal is largely the same as a previous ARFC to deploy an aUSDC GSM, which we supported at the time. The primary differences are that this proposal recommends shifting both the USDT and USDC GSMs, rather than just USDC, and it proposes shifting to stataTokens, which represent deposits on Aave but replace aToken’s growing balance mechanism with an accrued value mechanism.
Thus, we refer back to our previous analysis, which found that shifting the GSM to a yield-bearing token representing deposits in Aave was appropriate and presented limited additional risk. Additionally, since the analysis, the size of the USDC and USDT markets on Aave has grown significantly, adding a large amount of borrowable liquidity; the lowest amount of borrowable liquidity observed in either market since our previous recommendation was $11.3M in USDT on December 5. As anticipated in our previous recommendation, this was quickly remedied and USDT remained above 99% utilization for roughly an hour.
Given that the amount of borrowable liquidity has increased significantly for both USDC and USDT, alongside an increase in GHO’s market cap, we are comfortable with the recommended Bucket Capacity and Exposure Cap parameters.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.
Copyright
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