Specification
Gauntlet and Chaos have aligned on joint recommendations for CAPO parameters.
The CAPO parameter recommendations are consistent across chains for each asset, leading us to present these recommendations on a per-asset basis while noting the chains where each asset is listed. The total number of LST recommendations across chains amounts to 17, and for stablecoins, it totals 38, culminating in 55 CAPO recommendations altogether.
LSTs
| Asset | Minimum Snapshot Delay | Ratio Reference Time | Max Yearly Ratio Growth Percent | Price Cap | Ethereum | Arbitrum | Optimism | Polygon | Avalanche | Gnosis | Base | Metis | BNB | Total Chains |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| wstETH | 7 days | monthly | 8.72% | N/A | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 6 | |||
| rETH | 7 days | monthly | 7.46% | N/A | ✓ | ✓ | ✓ | 3 | ||||||
| sDAI | 7 days | monthly | 10.15% | underlying DAI | ✓ | ✓ | 2 | |||||||
| cbETH | 7 days | monthly | 7.04% | N/A | ✓ | ✓ | 2 | |||||||
| sFRAX | 7 days | monthly | 6.9% | N/A | ✓ | 1 | ||||||||
| MaticX | 14 days | monthly | 7.98% | N/A | ✓ | 1 | ||||||||
| stMATIC | 14 days | monthly | 8.85% | N/A | ✓ | 1 | ||||||||
| sAVAX | 14 days | monthly | 7.4% | N/A | ✓ | 1 |
Stablecoins
| Asset | Price Cap | Ethereum | Arbitrum | Optimism | Polygon | Avalanche | Gnosis | Base | Metis | BNB | Total Chains |
|---|---|---|---|---|---|---|---|---|---|---|---|
| USDC | 2% | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 8 | |
| USDT | 2% | ✓ | ✓ | ✓ | ✓ | ✓ | 6 | ||||
| USDC.e | 2% | ✓ | ✓ | ✓ | 3 | ||||||
| m.USDC | 2% | ✓ | 1 | ||||||||
| m.USDT | 2% | ✓ | 1 | ||||||||
| agEUR | 2% | ✓ | 1 | ||||||||
| EURS | 2% | ✓ | 1 | ||||||||
| USDbC | 2% | ✓ | 1 | ||||||||
| EURe | 2% | ✓ | 1 | ||||||||
| FDUSD | 2% | ✓ | 1 | ||||||||
| DAI | 3% | ✓ | ✓ | ✓ | 3 | ||||||
| m.DAI | 3% | ✓ | 1 | ||||||||
| xDAI | 3% | ✓ | 1 | ||||||||
| DAI.e | 3% | ✓ | 1 | ||||||||
| FRAX | 4% | ✓ | ✓ | ✓ | 3 | ||||||
| LUSD | 4% | ✓ | ✓ | ✓ | 3 | ||||||
| sUSD | 4% | ✓ | 1 | ||||||||
| crvUSD | 4% | ✓ | 1 |
LST Analysis
maxYearlyRatioGrowthPercent
sAVAX
MaticX
stMatic
Using the Methodology above
For wstETH, cbETH, sDAI, sFRAX:
For assets with varying degree of reward distribution/or having history of highly volatile APY (eg -rETH, sAVAX, stMatic, and MaticX) :
ratioReferenceTime Update Frequency
We recommend setting the ratioReferenceTime time frequency to monthly. We also note that reducing the frequency of ratioReferenceTime updates to 21 days equally captures the upticks of organic growth rate while not breaching the maxYearlyGrowthRatioPercent, this could be translate for better UX for users on the platform in cases of sustained organic increase in APYs.
wstETH
rETH
cbETH
sFrax
Stablecoin Analysis
Setting price caps for stablecoins comes with both advantages and disadvantages.
Setting a stablecoin’s price cap to 0% can cause utilization spikes during short-lived upward depegs. However, the majority of stablecoin suppliers do not borrow against their supply, and therefore high utilization should not significantly hinder those liquidations. Additionally, the vast majority of volatile asset suppliers borrow stablecoins against their positions. An increase in the price of the stablecoins during a market downturn could trigger more liquidations, which would add risk and negatively impact UX if the upward depeg is short-lived.
Conversely, stablecoins like LUSD, which have traded at a 4-5% premium for extended periods, may not benefit from a 0% cap. Mispricing an asset away from its market value can deter liquidators, a crucial consideration for maintaining market stability. Granted, if the community anticipates that certain stablecoins will persistently trade at a premium, it might be prudent to freeze and potentially delist these to safeguard against long-term risks and enhance asset quality on platforms like Aave.
Given these considerations, for fiat-backed stablecoins, expected to maintain a peg close to $1, we’ve set a 2% price cap, reflecting their lower risk of significant long-term depegging. Non-fiat-backed stablecoins have a 4% cap due to their higher volatility. DAI, with its substantial PSM buffer, is allocated a 3% cap, recognizing its intermediate stability profile.