[ARFC] Onboard Native USDC to Aave V3 Markets

Recommendations for Native USDC on Base, Polygon

We support the listing of native USDC on Polygon and Base with the proposed parameters, aligning them with those on other L2s.

Considering the current on-chain liquidity, in addition to the current supply and borrow of USDC.e on Polygon and USDbC on Base we recommend the following caps, which will allow migration of existing positions:

Supply Cap Recommendation Borrow Cap Recommendation
Base 10M 9M
Polygon 50M 45M

Source: Chaos Labs Risk Platform - 11.30.2023

Source: Chaos Labs Risk Platform - 11.30.2023

Recommendations for Native USDC on Optimism

Slope1 for the recently deployed Native USDC on V3 Optimism is currently set at 3.5%. Following the proposal to increase stablecoin borrow rates across Aave deployments, we recommend aligning the IR parameters of USDC on Optimism

Chain Asset Parameter Current Recommendation
Optimism USDC Slope1 3.5% 5%

Deprecation of Older Versions of USDC

If the community chooses to initiate the offboarding of older versions of USDC, we present two options: a moderate (Chaos recommended) and an aggressive approach. The key difference between these options is that the moderate approach does not include a recommendation to reduce Liquidation Thresholds, thereby avoiding any potential risk of liquidation for existing users.

These recommendations are intended to make native USDC supply and borrow more attractive than the older versions. This will be achieved by offering more favorable interest rates and preventing new supply, borrow, and collateralized positions involving the older versions of USDC.

Parameter Optimism Arbitrum Polygon Base
LT (Moderate / Aggressive) 80% / No Change 80% / No Change 80% / No Change No Change
LTV 0% 0% 0% 0%
Supply Freeze Freeze Freeze Freeze
Borrow Freeze Freeze Freeze Freeze
Slope1 7% 7% 7% 7%
Slope2 80% 80% 80% 80%
RF 20% 20% 20% 20%

As of 11.30.2023, reducing LTs of older versions of USDC on the various chains to 80% would have the following impact in terms of users eligible for liquidation:

Value Liquidated Accounts Liquidated
Optimism $7,096 183
Arbitrum $65,003 774
Polygon $25,416 224

Following the implementation of this proposal, we will monitor the impact of the updated parameters on the migration to native USDC and make additional parameter update recommendations as necessary.