[ARFC] Onboard Native USDC to Aave V3 Markets

On recommendations for native USDC

From a risk perspective, we support the following parameters for native USDC across relevant v3 deployments. It is worth noting that in an earlier poll from Gauntlet, the community did not approve LT reductions due to the amount of liquidations they will cause (more details on estimated liquidations below). That being said, we agree that these changes can make native USDC more attractive.

Risk Parameter Value
emode Yes
Isolation Mode No
Borrowable in Isolation No
Stable Borrow No
Enable Borrow Yes
Enable Collateral Yes
Loan To Value (LTV) 77%
Liquidation Threshold 80%
Liquidation Bonus 5%
Reserve Factor 10%
Liquidation Protocol Fee 10%
Debt Ceiling N/A
uOptimal 90%
Base 0%
Slope1 5%
Slope2 60%

With regards to the proposed LT; given native USDC has launched on Optimism and Arbitrum, the parameter changes in the ARFC decrease the Optimism native USDC LT from 85% to 80%, and Arbitrum native USDC LT from 86% to 80%, and may cause the following liquidations.

  • ~$550 on Arbitrum v3, as of 2023-12-04

We are aligned with the proposed caps for native USDC on v3 deployments.

Parameter Optimism Arbitrum Polygon Base
Supply Cap 25m 64m 50m 10m
Borrow Cap 20m 60m 45m 9m

On deprecation of bridged USDC

Interest rates for bridged USDC

We are aligned with the proposed IR changes for bridged USDC as a first step. Depending on equilibrium utilization following the change, the community may wish to further increase RF for bridged USDC.

Liquidations from LT reductions

Under the proposed framework of lowering LT to 80% for bridged USDC, the following borrow amounts may be liquidated, as of 2023-12-04.

Chain Borrows Liquidated
Optimism ~$8,500
Arbitrum ~$50,000
Polygon ~$39,000