Hi @ChaosLabs,
At Defi_Consulting, we are wondering if Choas Labs can elaborate on why the proposed Supply Cap and Borrow Cap methodology is not being applied here. We kindly suggest revising the Supply Cap and Borrow Cap methodology publication to incorporate the rational used above or alternatively, aligning the recommendation here with the proposed methodology.
Would it be possible for Chaos to elaborate on how was the 30% and 90k units figure was calculated ?
Regarding the daily trading volume, the Borrow Cap proposed, 10% daily trading vol, aligns with 3 of 4 highest days of trading volume on the Balancer pool.
Given an LST is primarily for holding, liquidity would have been a more applicable measure relative to trading volume. It is worth noting, a Borrow Cap set at 90k is not likely to encourage rewards being distributed to users borrowing MaticX. Even with deposit incentives, the recursive loop within just the MaticX reserve becomes more challenging to execute.
Given Aave’s past history with deposit and borrow rewards, is there room to increase the Borrow Cap ?
0.5% price impact on the single largest DEX pool is still conservative given the 10% Liquidation Bonus being proposed.
