Chaos Labs - Monthly Community Update

Governance
24

January 2025

This update highlights Chaos Labs’ activities and proposals in January.

Highlights

sUSDe and USDe Price Feed Update

We published two highly detailed analyses of sUSDe/USDe price feeds, recommending that they be switched to USDT price feeds. Our analysis found that USDe’s fundamental value is closely linked to USDT, as the majority of its perpetual hedges are denominated in USDT. We presented numerous scenarios, including exchange failure, finding that pricing USDe according to USDT would lead to preferable outcomes for the protocol and users.

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sUSD Risk Parameter Adjustments

Following a depeg of sUSD, we moved rapidly to recommend a decrease in its supply and borrow caps to prevent growth in the market. As an additional step, we later analyzed recent activity in the market and sUSD’s peg dynamics and mechanism design. We found that its current economics had contributed to a destabilized peg, even as it remained over-collateralized. As a result, we recommended setting sUSD’s LTV to 0%, as well as reducing the LTV and LT in the Optimism Stablecoins E-Mode.

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ggAVAX Listing

We recommended listing ggAVAX, an AVAX LST that utilizes MiniPools, a relatively unique mechanism that required further analysis. We had previously analyzed the asset, finding that its withdrawal system could pose a problem, as some tokens were locked for extended durations. Upon analyzing again, we found that this dynamic had changed, and average lock duration had dropped significantly. This fact, coupled with an analysis of the asset’s market pricing relative to its exchange rate, led us to recommend listing the asset with an E-Mode to facilitate leveraged yield strategies.

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Deploy stataUSDC and statUSDT GSMs on Ethereum

We responded in favor of a proposal to migrate existing USDT and USDC GSMs on Ethereum to their stataToken counterparts. We noted that, in a previous analysis, we had supported the proposal to use tokens representing deposits on Aave in GSMs. Upon another analysis, we reiterated this support, finding that there was always substantial borrowable liquidity in the markets in question.

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What’s Next

In the coming months, the Chaos team will continue its focus on the following areas:

  • Risk Oracle integrations leveraging Edge infrastructure.
  • Continuous optimization of risk parameters on all V3 deployments.
  • Analysis and parameter recommendations for new assets and markets.
  • Continuation of the V2 risk parameter updates to gradually reduce capital efficiency across V2 collateral assets.
  • Parameterization for new Liquid E-Modes.
  • GHO: ongoing recommendations, including updating parameters for cross-chain GHO.