Overview
Chaos Labs previously conducted an extensive review of USDai and sUSDai in October 2025 and recommended against listing the assets on Aave at that time. The decision was primarily driven by concerns related to peg volatility, liquidity risk associated with sUSDai redemptions, and uncertainty around the valuation and enforcement of GPU backed collateral.
Since that assessment, the USDai protocol has introduced several changes aimed at improving the stability and risk profile of the system. These include the removal of the USDai mint cap, the commitment of a liquidity buffer to support sUSDai redemptions during periods of elevated withdrawal demand, and a partnership with Barker that provides institutional grade valuation and value protection for GPU backed loans.
Taking these developments into account, we believe the USDai protocol has made meaningful progress in addressing the key risks identified in the previous assessment. While certain structural risks remain, particularly around liquidity dynamics of sUSDai, these can be effectively managed through appropriate risk controls at the Aave level.
Accordingly, we support the listing of USDai and sUSDai on Arbitrum v3 instance, subject to the conservative caps and risk mitigation measures outlined in this analysis.
Protocol Changes Since the Previous Analysis
Since the publication of the October 2025 assessment, the USDai protocol has introduced several changes that affect the risk profile of USDai and sUSDai. In this section, we review each change and explain how it impacts the risks identified in the prior analysis.
1. Partnership with Barker for GPU Collateral Value Protection
The previous analysis highlighted Credit and Counterparty Risk as a key concern. Although GPU backed loans are overcollateralized, the protocol relied on third party appraisals and secondary market resale of GPUs to recover value in the event of borrower default. Because the liquidation market for GPU collateral is still relatively untested, uncertainty around realized liquidation prices represented a potential solvency risk for the system.
To address this risk, the USDai protocol has partnered with Barker, an institutional valuation platform that provides independent collateral valuation for GPU backed loans.
Under this arrangement, every new GPU loan issued through the protocol receives a collateral valuation from Barker, which is accompanied by a contractual value warranty. Barker guarantees the accuracy of its valuation and backs this guarantee through an A rated institutional reinsurer (Munich Re) with extensive experience in asset backed credit markets.
The protection mechanism works as follows:
- Barker provides an independent valuation of the GPU collateral backing the loan.
- The protocol lends against this valuation up to the established loan to value limits.
- If the borrower defaults and the collateral is liquidated below the predicted valuation, Barker’s warranty covers the shortfall.
Coverage is structured at 80% of Barker’s collateral valuation, which aligns with the protocol’s maximum loan to value ratio. Because the loan principal does not exceed this threshold, the warranty effectively provides full protection against loss given default on the outstanding loan principal.
This mechanism materially improves the solvency profile of GPU backed loans. In a liquidation scenario where the resale price of GPUs falls below expectations, the shortfall is reimbursed to the protocol, protecting sUSDai holders from losses.
While this structure does not eliminate borrower default risk, it significantly reduces the uncertainty around collateral recovery that was previously identified in the Credit and Counterparty Risk section of the earlier analysis, thereby improving the overall solvency profile of the system. However, borrower default risk remains, and enforcement introduces additional complexity in cross jurisdictional settings. In particular, the legal recognition of electronic documents of title and bailment agreements may not be consistently upheld outside the United States, which could complicate repossession or collateral recovery in certain scenarios.
2. Removal of the USDai Mint Cap
One of the primary risks identified in the previous analysis was peg volatility caused by the fixed USDai mint cap, discussed in Peg Volatility and Secondary Market Dynamics. Because the supply of USDai was capped, persistent demand pushed the token to trade at a sustained premium on secondary markets.
Since the previous analysis, the USDai team has removed the protocol level mint cap, allowing supply to expand in response to demand. This change materially improved peg stability by enabling arbitrageurs to mint new USDai when the token trades above parity and sell it on secondary markets.
3. Introduction of a Utilization Based Constraint on Loan Origination
Another key concern raised in the previous assessment was Liquidity and Redemption Risk. Because sUSDai capital is deployed into long duration GPU-backed loans, redemptions depend on available liquidity and principal and interest repayment. As utilization increases, more capital becomes tied up in active loans, potentially extending withdrawal timelines during periods of elevated redemption demand.
To mitigate this structural liquidity mismatch, the USDai team has committed to introducing an onchain utilization based constraint on loan origination.
Under the proposed framework, once utilization reaches 80% of total available capital, the protocol will no longer originate new GPU backed loans. This mechanism is intended to ensure that a portion of liquidity remains available within the system to service redemptions, rather than allowing full deployment into long duration credit positions. The 80% threshold is expected to be configurable and adjustable through governance.
While this change has not yet been implemented, it directly targets the liquidity mismatch identified in the previous analysis. Once implemented as described, it would improve the protocol’s ability to handle redemption pressure without relying on immediate loan repayments, thereby reducing the probability and severity of liquidity driven stress events.
4. Change in Base Backing from M Token to PYUSD
Since the previous assessment, the USDai protocol has updated the base backing structure of USDai. Previously, USDai was backed by the M0 Protocol’s base asset (M), which represented tokenized short duration U.S. Treasury exposure through the M0 infrastructure.
The protocol has now transitioned to using PYUSD as the base collateral backing for USDai.
This change directly addresses the Liquidity Management and Operational Risk section identified in the previous analysis. Under the prior design, minting and redemption relied on a Uniswap v3 USDC–M pool on Arbitrum, with liquidity dependent on manual cross chain rebalancing and M0 minting capacity. In addition, all minting and redemption flows were subject to the Uniswap v3 swap fee, meaning users incurred a cost when entering or exiting USDai. This structure introduced operational complexity, reliance on active liquidity management by the team, and potential delays in redemption during periods of imbalance or network congestion.
By moving to PYUSD as the base backing asset, the protocol eliminates the need for manual cross chain liquidity cycling, and simplifies the redemption pathway. As a result, the operational risks related to liquidity provisioning and pool imbalances are significantly reduced.
However, this change introduces a different tradeoff. While USDai can now be redeemed 1:1 into PYUSD, onchain liquidity for PYUSD on Arbitrum remains limited. In scenarios where users seek to exit into other stable assets, this introduce liquidity constraints. That said, PYUSD adopts the OFT standard via LayerZero, enabling fast bridging to Ethereum mainnet, typically within minutes. This provides an alternative liquidity path and partially mitigates the limitations of local liquidity on Arbitrum.
5. Changes to the sUSDai Redemption Mechanism
The protocol has also updated the redemption process for sUSDai.
Under the previous model, each redemption request was subject to an individual 30 day cooldown period, after which users could claim their underlying USDai if liquidity was available. Redemption requests were processed sequentially through a queue.
Under the updated design, redemptions are processed once per month in a single batch. All redemption requests submitted before the processing date for that month are serviced together, regardless of when the request was made within that period.
As utilization of GPU backed loans increases over time, redemption capacity will continue to depend on available liquidity and loan repayments. For this reason, the current mechanism should be viewed primarily as an operational improvement rather than a structural solution to the liquidity mismatch discussed in the previous analysis.
The sustainability of the redemption design will ultimately depend on how the protocol manages loan utilization and liquidity buffers as the GPU lending market expands.
6. ICO Proceeds as a Backstop for Liquidity Stress
Since the previous analysis, the USDai protocol has conducted an ICO and raised approximately $8.8 million. The team has indicated that these proceeds may be used as a backstop to support liquidity during periods of elevated redemption demand for sUSDai.
This development provides an additional layer of support against the Liquidity and Redemption Risk identified in the earlier assessment. In stress scenarios where available onchain liquidity is insufficient to meet withdrawal demand, the use of treasury funds can help bridge short term gaps and reduce the likelihood of immediate redemption pressure translating into secondary market dislocations.
However, while this mechanism is directionally positive, its effectiveness is inherently limited by the size of the proceeds relative to the potential scale of sUSDai redemptions. As the protocol grows, the total outstanding sUSDai supply may exceed the ICO proceeds by a significant margin, reducing the relative impact of this backstop in severe stress scenarios.
As a result, the ICO proceeds should be viewed as a supplementary mitigation rather than a primary solution to the structural liquidity mismatch. They can help absorb moderate shocks and smooth short term imbalances, but are unlikely to fully offset large scale redemption events on their own.
7. Changes to the USDai Mint and Redemption Mechanism
The USDai protocol announced a significant change to its minting and redemption design, transitioning from an open and atomic model to a permissioned, market maker mediated structure.
Under the previous model, minting and redemption between USDai and PYUSD were fully atomic and permissionless, allowing users to convert between the two assets at a 1:1 ratio. However, this process required users to bridge PYUSD between Ethereum and Arbitrum, as PYUSD liquidity is primarily located on mainnet.
Beginning April 6, direct minting and redemption of USDai will be restricted to KYC approved market makers and institutional participants. In addition, a redemption fee of ~1-2 basis points will be applied.
Under the new model:
- Only whitelisted market makers and large institutions can access primary mint and redemption flows
- Whitelisted access requires KYB, active trading activity, and a minimum of $10M in sUSDai and/or USDai
- Secondary market liquidity becomes the primary access point for users
- The protocol will seed 5 million in USDC-USDai liquidity at ~3 bps and 10 million in PYUSD-USDai liquidity at ~1-2 bps to support onchain redemptions, with a portion of the PYUSD-USDai liquidity sourced from sUSDai backing
- Paxos approved market makers are expected to provide continuous liquidity and tighten spreads
From a user perspective, this change reduces operational complexity by removing the need to bridge PYUSD across chains for minting and redemption. Instead, users can enter and exit USDai directly through onchain liquidity pools.
However, this structure introduces a new pricing dynamic. Because market makers incur a 10 basis point redemption fee, secondary market prices are expected to reflect this cost. As a result, USDai may trade at a persistent discount relative to its notional 1 USD value, likely in the range of 2 to 5 basis points under normal conditions.
Overall, the new design simplifies UX and may improve market quality under normal conditions, but it introduces a structural reliance on market makers for maintaining price stability. As long as the underlying backing of USDai remains fully liquid, we expect secondary market pricing to remain efficient, with deviations from parity primarily reflecting the redemption fee rather than structural dislocations.
Impact of the Changes on the Original Risk Framework and Remaining Risks
The updates introduced by the USDai protocol address key risks identified in the October 2025 assessment. In this section, we revisit each risk in the same order as presented in the previous analysis and evaluate the impact of the recent protocol changes on a one by one basis.
While certain risks have been materially reduced, some risks remain unchanged due to their structural or market driven nature. The table below summarizes the impact of the protocol changes across each risk category.
| Risk Category | Impact | Key Change |
|---|---|---|
| Peg Volatility and Secondary Market Dynamics | Reduced | Removal of USDai mint cap |
| Liquidity Management and Operational Risk | Reduced | Transition from M to PYUSD, removal of Uniswap dependency |
| Liquidity and Redemption Risk | Reduced | Proposed utilization constraint, ICO proceeds backstop |
| Collateral Value and Depreciation Risk | Unchanged | - |
| Credit and Counterparty Risk | Reduced | Partnership with Barker, valuation warranty |
Overall, the protocol changes represent meaningful progress in addressing the previously identified risks. However, the system continues to exhibit exposure to liquidity and collateral related risks, which remain the primary areas of focus from a risk management perspective.
1. Peg Volatility and Secondary Market Dynamics
The removal of the USDai mint cap materially improves peg stability. Under the previous design, constrained supply led to persistent premiums in secondary markets, limiting arbitrage efficiency. With the cap removed, arbitrageurs can now expand supply in response to demand, significantly reducing the likelihood of sustained deviations from parity. As a result, peg volatility risk has been largely mitigated.
2. Liquidity Management and Operational Risk
The transition from M to PYUSD simplifies the minting and redemption process and removes dependencies on manual cross chain liquidity management and M0 infrastructure. This significantly reduces operational complexity and eliminates prior sources of potential redemption delays and inefficiencies, including swap fee friction.
At the same time, the reliance on PYUSD introduces a new dependency on cross chain liquidity access, given the currently limited onchain liquidity on Arbitrum. While fast bridging via LayerZero provides an alternative pathway, it introduces reliance on external infrastructure during stress scenarios. From the protocol’s perspective, the operational burden of managing liquidity has largely been removed. However, the complexity of sourcing liquidity and executing cross chain transfers is effectively transferred to users, particularly in scenarios where local liquidity is insufficient.
3. Liquidity and Redemption Risk
Liquidity risk has improved but remains the most significant residual risk. The proposed utilization constraint on loan origination, together with the availability of ICO proceeds as a potential backstop, introduces mechanisms that can help absorb moderate redemption pressure and preserve available liquidity.
However, these measures do not fully resolve the structural mismatch between long duration GPU backed loans and user redemption expectations. The utilization constraint has not yet been implemented, and the ICO proceeds are limited relative to potential system scale. In scenarios of large scale or rapid withdrawals, the protocol may still face constraints in meeting redemption demand, which could result in secondary market dislocations.
4. Collateral Value and Depreciation Risk
This risk, identified in the previous analysis, remains largely unchanged. It is fundamentally market driven and cannot be fully mitigated through protocol design. While the partnership with Barker reduces uncertainty around valuation, it does not prevent declines in underlying collateral value.
As a result, the primary mitigation available to the protocol is maintaining conservative loan to value ratios. These provide a buffer against adverse price movements but do not eliminate the risk of collateral depreciation impacting the system, particularly under prolonged market downturns.
5. Credit and Counterparty Risk
The partnership with Barker reduces uncertainty around collateral valuation and improving the solvency profile of GPU backed loans. The valuation warranty structure mitigates loss given default at the loan level and provides stronger guarantees around collateral realization.
However, borrower default risk and enforcement risks remain, particularly in cross jurisdictional contexts. Legal recognition of electronic documents of title and bailment agreements may not be consistent outside the United States, which can complicate collateral recovery. Therefore, while this risk has been reduced, it is not eliminated.
6. Liquidity Migration and Leverage Unwind Risk (v4 Transition)
An additional risk emerges from Aave’s expected transition from v3 to v4, which is exogenous to the USDai protocol but directly relevant to sUSDai positions on Aave.
As liquidity migrates from v3 to v4, particularly from stablecoin suppliers, available liquidity on v3 is expected to decline. This reduction in supply can lead to an increase in borrowing costs, incentivizing borrowers to repay outstanding positions and unwind leverage.
For sUSDai, this dynamic introduces a specific risk. Leveraged looping positions that rely on stablecoin borrowing may be forced to unwind as borrowing costs rise. A synchronized unwind of these positions can create concentrated sell pressure on sUSDai in secondary markets.
Given the existing liquidity constraints and redemption mechanics of sUSDai, such an unwind could lead to a temporary dislocation between the exchange rate and the secondary market price. In this scenario, users exiting leveraged positions may face slippage.
This dynamic can result in looped positions becoming economically inefficient, or entering a negative carry state, where borrowing costs exceed yield. While this does not directly introduce solvency risk to Aave, it increases the likelihood of secondary market volatility and user level losses during migration periods.
As a result, migration related liquidity shifts should be considered a potential catalyst for stress events in sUSDai markets, particularly if combined with elevated utilization levels at the protocol level.
Aave Specific Risk Considerations and Recommended Risk Mitigations
While the USDai protocol has introduced improvements that reduce several previously identified risks, sUSDai continues to exhibit structural liquidity risk driven by the duration mismatch between long term GPU backed loans and user redemption expectations. This risk becomes increasingly relevant as utilization grows and a larger share of capital is locked in active loans.
From Aave’s perspective, the primary objective is to prevent scenarios where a potential sUSDai depeg leads to bad debt or causes stablecoin liquidity to become trapped in looped positions. The following mitigations are designed to directly address these risks.
1. Restrictive E-Mode Configuration
sUSDai should be placed within stablecoin E-Mode categories alongside with large stablecoin markets.
Specifically, sUSDai should not be allowed to borrow a significant portion of the available stablecoin liquidity of any stablecoin reserve on Aave. This is critical because during a depeg scenario, borrowed stablecoins can become trapped in sUSDai looping positions. This can cause an sUSDai liquidity crunch to spread into Aave stablecoin markets, reducing available liquidity across the protocol and amplifying systemic risk.
Restricting borrowable assets against sUSDai ensures that exposure to this failure mode remains contained.
2. Migration Tool from v3 to v4
To mitigate the Liquidity Migration and Leverage Unwind Risk associated with the transition to Aave v4, a dedicated migration tool should be introduced to allow users to transfer existing positions without requiring a full unwind.
Under a standard migration scenario, users would need to repay their debt, unwind their collateral positions, and re enter on v4. For sUSDai looped positions, this process can introduce significant slippage due to limited secondary market liquidity, particularly during periods of synchronized deleveraging.
A migration tool can eliminate this friction by enabling atomic position transfers between v3 and v4.
The mechanism would operate as follows:
- A flashloan is used to repay the user’s outstanding debt on v3
- The collateral is released and transferred to v4
- A new position with the same leverage is opened on v4
- The flashloan is repaid within the same transaction
This design allows users to migrate their positions without interacting with secondary markets, avoiding slippage and minimizing execution risk.
Importantly, this mechanism is not specific to sUSDai positions. It is broadly applicable to a wide range of leveraged strategies on Aave, including LST and LRT looping positions, as well as other structured yield strategies such as Ethena based loops. As such, it provides a general purpose solution for reducing migration related friction and systemic unwind risk across the protocol.
Overall, the migration mechanism acts as a structural safeguard during the v3 to v4 transition, ensuring that liquidity shifts do not translate into avoidable market stress for sUSDai or broader Aave markets.
3. Risk Oracle for Secondary Market and Exchange Rate Monitoring
As an additional safeguard, a dedicated risk oracle could be implemented to continuously monitor:
- sUSDai secondary market price
- sUSDai exchange rate
If the deviation between these two metrics exceeds a predefined threshold, the market should be frozen for new borrowing.
While not required for initial deployment, particularly given that sUSDai utilization is currently at very safe levels, this mechanism would provide an additional layer of protection by preventing new positions from being opened at distorted prices during periods of stress. Existing positions, having been originated at fair value, would continue to be managed through standard processes if needed.
4. Utilization Aware Risk Premium (v4 Only)
For Aave v4 deployments, the use of dynamic risk premiums provides a more granular way to account for sUSDai’s evolving risk profile.
At low sUSDai utilization levels, where a large portion of capital remains liquid, sUSDai presents relatively low liquidity risk and can be assigned a near zero risk premium. However, as utilization increases and more capital is deployed into long duration loans, the probability and severity of a liquidity crunch increases materially.
A risk oracle can monitor utilization levels of sUSDai protocol and dynamically adjust the risk premium applied to sUSDai within its dedicated spoke. This creates a feedback mechanism: as risk increases, borrowing costs rise, discouraging additional protocol exposure to sUSDai and incentivizing unwinds on Aave if sUSDai utilization reaches extreme levels.
5. Reserve Factor Consideration
We recommend setting the reserve factor for USDai at 20%, above the level typically used for conventional stablecoin markets.
The rationale is tied to the type of exposure Aave is expected to accumulate through the USDai market. In practice, users are expected to supply sUSDai as collateral and borrow USDai against it. As a result, the primary source of borrow demand for USDai will come from sUSDai linked leverage strategies.
As a result, sUSDai exposes Aave to a higher degree of liquidity and market dislocation risk relative to other collaterals.
Setting the reserve factor at 20% serves as a mechanism to balance this risk. By allocating a larger share of interest revenue to the protocol, Aave builds an additional buffer that compensates for the elevated risk profile of the asset.
This approach ensures that the risk reward profile remains aligned.
Market Analysis
This section reviews the current onchain state of USDai and sUSDai across Arbitrum and Plasma, with a focus on supply composition, liquidity availability, and recent trends in user behavior.
USDai Effective Circulating Supply
On Arbitrum, the total USDai supply is approximately 275 million. However, the effective circulating supply is significantly lower once structural constraints are taken into account. After excluding USDai that is staked into sUSDai and USDai that is reserved for upcoming loan originations, the liquid supply that can be actively utilized on DeFi is around 37 million.
On Plasma, total USDai supply is approximately 10 million.
Across both chains, USDai supply has been declining over time. This trend is driven by two primary factors:
- A reduction in TVL following the ICO period
- An increase in the staking ratio, as users shift from holding USDai toward staking into sUSDai or redeeming positions, particularly as incentives such as points programs lose effectiveness
sUSDai Circulating Supply
On Arbitrum, total sUSDai supply is approximately 181 million. However, this market has experienced a noticeable decline following a concentrated withdrawal event in March after large PT market matured. After the decline, supply has been rebounding.
On Plasma, sUSDai supply is approximately 62 million and has shown more stable behavior.
Liquidity
Onchain liquidity for USDai and sUSDai has declined since the previous analysis, primarily due to changes in user incentives. The earlier liquidity environment was supported in part by points programs that encouraged users to provide depth on DEXs such as Fluid. As these incentives lost effectiveness, a portion of liquidity providers withdrew capital, leading to a reduction in available swap depth.
This trend is particularly evident on Plasma, where USDai liquidity has decreased significantly compared to prior levels. The decline reflects a reduced willingness to maintain liquidity positions in the absence of strong incentive structures. On Arbitrum, liquidity has also declined, although it remains comparatively more resilient.
Current sell side liquidity conditions, measured as the maximum size that can be swapped within 5% price impact, are as follows:
- USDai: ~$5M to USDC (down from $30M)
- sUSDai: ~$4.5M to USDC (down from $35M)
It is important to note that a significant portion of the USDai exit liquidity is indirectly routed through sUSDai pools rather than standalone USDai pairs. This introduces an additional layer of dependency, as effective USDai liquidity is partially reliant on the liquidity conditions of sUSDai markets.
These figures highlight a meaningful contraction in USDai liquidity.
Despite this contraction, onchain liquidity remains sufficient to support moderate size transactions. More importantly, the protocol benefits from fast cross chain bridging infrastructure that helps maintain price consistency across markets. USDAI can be redeemed to PYUSD 1:1 on Arbitrum and can be bridged efficiently between Arbitrum and Ethereum via LayerZero. These fast bridging pathways enable arbitrageurs to quickly rebalance liquidity across chains, helping maintain tight price alignment between pools and preserving peg stability across different trading venues.
With the upcoming changes to the USDai mint and redemption mechanism, the USDai team has committed to seeding 5 million in USDai-USDC liquidity and 10 million USDai-PYUSD liquidity. This is expected to improve the availability of a more direct and independent liquidity path for USDai, reducing reliance on sUSDai routed liquidity.
Pricing
This section outlines the recommended oracle design for USDai and sUSDai on Arbitrum, taking into account their structural differences and associated risks.
USDai
For USDai, we recommend against using an USDai market price based oracle on Arbitrum, and instead propose adopting a PYUSD market oracle, reflecting the underlying asset.
As USDai is designed to maintain parity through its backing in PYUSD and direct redemption pathway, there are several concerns associated with relying on USDai market price oracles in its current liquidity environment:
- Onchain liquidity is limited, highly dynamic, and dependent on incentive programs. As these incentives fluctuate, liquidity depth and distribution can change rapidly.
- A significant portion of USDai liquidity is concentrated on Fluid DEX, which operates with fixed price ranges. LPs are unable to actively rebalance their positions in response to price movements. As a result, if the market price deviates beyond ±0.5%, the liquidity can become out of range, leading to sudden drops in effective liquidity.
- Chainlink classifies USDai market price feeds as high risk, reflecting the potential for price dislocations and limited robustness under stress conditions.
Given these factors, reliance on the market price feed may introduce unnecessary volatility into the oracle system and increase the risk of unwarranted liquidations during temporary market dislocations.
By using a PYUSD market oracle, pricing becomes aligned with the protocol’s redemption asset and given the deeper liquidity of PYUSD, it partially minimizes short term market fluctuations. This approach ensures stability in collateral valuation and prevents transient liquidity conditions from propagating into Aave’s risk framework.
sUSDai
Given the hybrid nature of sUSDai as a yield bearing and liquidity constrained asset, pricing requires a structured approach that isolates exchange rate growth while maintaining stability at the base asset level.
We recommend pricing sUSDai using its exchange rate relative to USDai.
The exchange rate can be directly obtained from the sUSDai contract via:
convertToAssets(1e18)
This returns the amount of underlying USDai per unit of sUSDai.
We recommend applying a CAPO dynamic cap at the exchange rate level. This ensures that the growth of the exchange rate remains bounded relative to expected yield accrual, preventing abnormal spikes or manipulation at the source of valuation.
We also recommend adopting the PYUSD market rate oracle as underlying pricing mechanism to multiply by the exchange rate feed.
CAPO
sUSDai accrues yield over time through two primary sources: interest generated from GPU backed lending activity and the yield derived from USDai’s base backing in PYUSD, which itself generates returns from short duration U.S. Treasury exposure. This combined yield is reflected in the increasing exchange rate between sUSDai and USDai, representing the underlying value growth of the asset.
To ensure a robust and manipulation-resistant CAPO price feed for the sUSDai/USDai pair, we propose a maxYearlyRatioGrowthPercent of 15%, reflecting the expected annualized interest generated from GPU backed lending activity and the yield derived from USDai’s base backing. Additionally, we recommend setting the MINIMUM_SNAPSHOT_DELAY to 14 days to smooth out short-term volatility and ensure consistency in pricing inputs.
*A temporary negative rebase is visible in late January in the historical sUSDai exchange rate. According to the USDai team, this was caused by an error in which more funds than required were transferred into an escrow for a specific loan. The team stated that guardrails have since been implemented at the smart contract level to prevent the same issue from recurring. As such, this data point should be interpreted as an operational outlier rather than a reflection of the intended yield mechanics of sUSDai.
Specification
| Parameter | Value | Value |
|---|---|---|
| Asset | sUSDAI | USDAI |
| Instance | Arbitrum | Arbitrum |
| Isolation Mode | N/A | N/A |
| Borrowable | No | No |
| Collateral Enabled | No | No |
| Supply Cap | 55,000,000 | 55,000,000 |
| Borrow Cap | - | 45,000,000 |
| Debt Ceiling | - | - |
| LTV | - | - |
| LT | - | - |
| Liquidation Penalty | - | - |
| Liquidation Protocol Fee | 10.00% | 10.00% |
| Variable Base | - | 1% |
| Variable Slope1 | - | 3% |
| Variable Slope2 | - | 50% |
| Uoptimal | - | 80.00% |
| Reserve Factor | - | 20% |
| Stable Borrowing | Disabled | Disabled |
| Flashloanable | No | Yes |
| Siloed Borrowing | No | No |
| Borrowable in Isolation | No | No |
| E-Mode Category | 1 | 1, 2 |
E-Mode Configurations
sUSDAI Stablecoin - Arbitrum #1
| Parameter | Value | Value |
|---|---|---|
| Asset | sUSDAI | USDAI |
| Collateral | Yes | No |
| Borrowable | No | Yes |
| Max LTV | 88.00% | - |
| Liquidation Threshold | 90.00% | - |
| Liquidation Bonus | 4.00% | - |
USDAI Stablecoin - Arbitrum #2
| Parameter | Value | Value | Value |
|---|---|---|---|
| Asset | USDAI | USDC | USDT0 |
| Collateral | Yes | No | No |
| Borrowable | No | Yes | Yes |
| Max LTV | 90.00% | - | - |
| Liquidation Threshold | 92.00% | - | - |
| Liquidation Bonus | 1.00% | - | - |
CAPO
| maxYearlyRatioGrowthPercent | ratioReferenceTime | MINIMUM_SNAPSHOT_DELAY |
|---|---|---|
| 15% | monthly | 14 |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.
Copyright
Copyright and related rights waived via CC0