Overview
After reviewing the previously recommended parameters and characteristics for tBTC, we reaffirm our original recommendation, as there have not been any significant changes to the asset’s characteristics.
Regarding tBTC pricing, we commend @bgdlabs for their comprehensive analysis and support using the BTC/USD price feed (option 2) during the initial phase of the market to mitigate the risk of price manipulation.
We also endorse @LlamaRisk’s proposal to utilize Chainlink’s Proof-of-Reserve feeds as a trigger to switch to market pricing, which would help prevent unnecessary bad debt in the event of insolvency.
In terms of liquidity, we highlight that while there are improvements in certain areas compared to previous analyses, this is largely due to the volatility of liquidity depth, which remains highly concentrated. Overall, on-chain liquidity has decreased slightly since our last review.
Therefore, we do not recommend more aggressive listing parameters for the Ethereum deployment.
We support an Arbitrum listing with parameters aligned to the Ethereum deployment but with reduced supply and borrow caps of 80 tBTC and 40 tBTC, respectively, following Aave’s methodology of keeping volatile assets’ caps below 50% of the on-chain supply.
Finally, we agree that liquidity on Optimism is too low to list the asset at this point in time.
CAPO recommendations:
Given tBTC’s capability to be redeemed 1:1 for BTC permissionlessly within hours, we recommend aligning our price cap recommendations with those of similar assets.
| Price Cap |
|---|
| 4% |
Specification
Following the previously recommended parameters, we recommend listing tBTC on Arbitrum with the following parameter settings:
| Parameter | Value |
|---|---|
| Isolation Mode | No |
| Borrowable | Yes |
| Collateral Enabled | Yes |
| Supply Cap (tBTC) | 80 |
| Borrow Cap (tBTC) | 40 |
| Debt Ceiling | - |
| LTV | 73.00% |
| LT | 78.00% |
| Liquidation Bonus | 7.50% |
| Liquidation Protocol Fee | 10.00% |
| Variable Base | 0.0% |
| Variable Slope1 | 4.00% |
| Variable Slope2 | 300.00% |
| Uoptimal | 45.00% |
| Reserve Factor | 20.00% |
| Stable Borrowing | Disabled |
| Flashloanable | Yes |
| Siloed Borrowing | No |
| Borrowed in Isolation | No |
We will update the recommendation in our first response.