Overview
Chaos Labs recommends a reduction to GHO’s IR curve on Ethereum Prime and USDS’s IR Curve on Ethereum Core.
Motivation
Following a recent reduction in GHO and USDS IR curves on Ethereum Prime, we have observed continued underutilization of the market due to a relatively high base rate in both markets.
The chart below illustrates GHO’s utilization alongside the target borrow rate (Base + Slope 1) since January 15:
Additionally, significant incentives have been allocated to GHO suppliers through implicit aEthLidoGHO Balancer pool incentives, as well as the depositing of a 10M GHO facilitator into the market.
The USDS market has also faced declining borrowing demand despite significant supply growth and incentives for borrowing external stablecoins. This decline aligns with the broader market downturn in stablecoin rates:
To stimulate borrowing demand for these assets, we propose a 50 basis point (bps) reduction in their respective Base rates. This adjustment will ensure that the borrow rates remain competitive, encouraging users to utilize the currently idle supply.
Specification
| Instance | Asset | Parameter | Current | Proposed |
|---|---|---|---|---|
| Ethereum Prime | GHO | Base | 6.50% | 6.00% |
| Ethereum Core | USDS | Base | 8.75% | 8.25% |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this AGRS update.
Copyright
Copyright and related rights waived via CC0