Overview
Chaos Labs provides risk parameter recommendations for the addition of FDUSD to the BNB deployment. Following are our analysis and risk parameter recommendations for the initial listing.
Chaos Labs does not account for counterparty risk in our assessment and the recommendations below are based purely on market and liquidity conditions
Liquidity
Peg Stability
Since its launch, FDUSD has demonstrated relative resilience in maintaining its peg to the US Dollar. While the peg may not always be steadfast, it consistently maintains its value and trends to its intended target, showcasing its ability to navigate fluctuations and sustain its value relative to the USD.
Liquidity and Market Cap
When analyzing market cap and trading volumes of assets for listing, we look at data from the past 180 days. For FDUSD, since its launch in late July, the average market cap over the past 180 days was ~$847M, and the average daily trading volume was ~$1.3B (CeFi & DeFi).
Liquidation Threshold
Considering the relatively short track record of FDUSD, we suggest starting with a more conservative LT parameter compared to USDT and USDC, setting it at 75%.
Supply Cap and Borrow Cap
Applying Chaos Labs’ approach to setting initial supply caps for new assets, we propose setting the supply cap at 2X the on-chain liquidity available under the Liquidation Incentive (configured to 5%) price impact.
Given the current liquidity, and in addition to the bootstrap liquidity discussed in the proposal above, we recommend an initial supply cap of 8,000,000 FDUSD.
IR Curves
We recommend setting the IR curve in line with those of USDT
Recommendation:
| Risk Parameter | FDUSD |
|---|---|
| Isolation Mode | NO |
| Enable Borrow | YES |
| Borrowable in Isolation | YES |
| Enable Collateral | YES |
| Emode Category | NO |
| Loan To Value | 70% |
| Liquidation Threshold | 75% |
| Liquidation Bonus | 5.00% |
| Reserve Factor | 20.00% |
| Liquidation Protocol Fee | 10.00% |
| Borrow Cap | 7,500,000 |
| Supply Cap | 8,000,000 |
| Debt Ceiling | N/A |
| Stable Borrowing | NO |
| uOptimal | 90% |
| Base | 0% |
| Slope1 | 6% |
| Slope2 | 75% |