Summary
A proposal to:
- Increase RLUSD’s borrow cap on the Ethereum Core instance.
All cap increases are backed by Chaos Labs’ risk simulations, which consider user behavior, on-chain liquidity, and price impact, ensuring that higher caps do not introduce additional risk to the platform.
RLUSD (Ethereum)
RLUSD has reached 100% borrow cap utilization, while its supply cap utilization is at 83% and rising.
Supply Distribution
The supply of RLUSD is not highly concentrated, with the largest user representing just over 25% of the total supplied. Additionally, the asset cannot be used as collateral, reducing the risk of this market.
Borrow Distribution
Borrowing is more concentrated, though the risks of this concentration are mitigated by the smaller notional value of borrows; the top borrower represents 60% of the total.
The user is borrowing USDT and RLUSD against cbBTC, maintaining a relatively strong health score of 1.63. The second largest user is borrowing a variety, including 4.5M RLUSD, of assets against AAVE and weETH, maintaining a strong health score of over 3. These positions do not present a risk to the protocol.
Liquidity
RLUSD’s liquidity has remained relatively stable in recent months, concentrated in a Curve pool, allowing us to recommend an increase in its borrow cap.
Recommendation
Given the limited risks posed by RLUSD as a non-collateral asset, and taking into account its stable liquidity, we recommend increasing the asset’s borrow cap.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum | RLUSD | 300,000,000 | - | 40,000,000 | 60,000,000 |
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 AGRS recommendation.
Copyright
Copyright and related rights waived via CC0