Summary
Chaos Labs supports this recommendation to lower GHO’s Base Rate from 10.50% to 8.50%.
Motivation
Since listing, GHO on Prime has been consistently underutilized as its Borrow Rate has consistently remained higher than that of other stablecoin assets in the same pool. This was caused by its Base Rate being set higher than optimal. Reducing the Base Rate from 10.50% to 8.50% would make the asset’s interest rate curve more competitive with USDC and USDS in the Prime instance; their borrow rate has occasionally been below GHO’s recommended Base Rate for the past two weeks.
Reducing the GHO Base Rate to 8.5% will also better align its borrow rate range with the latest proposed GHO Interest Rate within the Ethereum Facilitator, which, following the latest recommended change from TokenLogic, is expected to range between 11.50% and 8.05%, depending on the utilization of the discount function.
Additionally, GHO’s liquidity against sUSDe, which is likely to be its most popular collateral asset once its borrow rate is more competitive, has remained stable over the past two months.
Given these considerations, we agree with the recommendation.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.
Copyright
Copyright and related rights waived via CC0