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 |