Summary
A proposal to:
- Increase WETH’s supply cap on the Sonic instance.
- Increase USDC.e’s supply cap on the Sonic instance.
- Increase rsETH’s supply cap on the Ethereum Core instance.
WETH (Sonic)
WETH’s supply cap utilization has reached 89%, while its borrow cap utilization stands at 100%.
Supply Distribution
The largest supplier accounts for 42% of the total and borrows USDC.e against their collateral, with a health score of 1.36. Other large suppliers maintain similar health scores, meaning they are not at high risk of liquidation.
The largest borrowed asset against WETH is USDC.e, $12.37M of the $13.73M total.
Borrow Distribution
WETH is primarily being borrowed by two users against USDC.e who maintain health scores of 1.44 and 1.24, respectively. While these positions do pose some risk of liquidation, they are not a risk to the protocol at this time.
USDC.e represents virtually all of the collateral against WETH borrows.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing its supply and borrow caps.
USDC.e (Sonic)
USDC.e’s supply cap utilization has reached 99%, while its borrow cap utilization stands at 30%.
Supply Distribution
USDC.e’s supply distribution presents little risk, as the largest suppliers are either supply-only or looping the asset with itself.
The asset is primarily being used as collateral to loop with itself, though WETH borrowing has increased recently.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing the asset’s supply cap.
rsETH (Ethereum Core)
The supply cap utilization of rsETH has reached 92%.
Supply Distribution
The two largest suppliers are rsETH yield generation strategies and represent an outsized portion of the total, though they present limited risk of liquidation.
rsETH is primarily used to borrow wstETH, putting the market at low risk of large-scale liquidations.
Recommendation
Given user behavior, we recommend increasing the supply cap.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Sonic | WETH | 15,600 | 20,000 | 5,500 | 11,000 |
| Sonic | USDC.e | 120,000,000 | 140,000,000 | 110,000,000 | - |
| Ethereum Core | rsETH | 400,000 | 480,000 | 1 | - |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0