Summary
A proposal to:
- Increase the USDe supply cap and debt ceiling on the Ethereum Core instance.
- Increase WAVAX’s supply cap on the Avalanche instance.
USDe (Core)
USDe’s supply cap and debt ceiling utilization has reached 100%.
Supply Distribution
Although USDe distribution shows a high level of supply concentration — with the top supplier holding 72.5% of the total supply — the current positions present limited liquidation risk. This is because all borrowings against USDe amount to $50 million in stablecoins, and the top supplier is also among those borrowing stablecoins using USDe as collateral.
Recommendation
Given user behavior and the low risk of liquidations, we recommend increasing the supply cap to 240,000,000 USDe and debt ceiling to $60,000,000.
WAVAX (Avalanche)
WAVAX has reached 76% supply cap utilization following new deposits.
Supply Distribution
Supply is somewhat concentrated, with the largest user accounting for 42% of the total WAVAX supplied; this user is borrowing BTC.b and WETH.e against their collateral at a health score of 2, putting it at relatively low risk of liquidation.
WETH.e now accounts for a significant portion of the value borrowed against WAVAX, at nearly $18M.
Liquidity
WAVAX’s on-chain DEX liquidity remains sufficient to allow us to recommend an increase in the asset’s supply cap. A 100K WAVAX for USDC swap can currently be completed at less than 10% price impact.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing WAVAX’s supply cap.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Core | USDe | 120,000,000 | 240,000,000 | 110,000,000 | - |
| Avalanche | WAVAX | 12,000,000 | 14,500,000 | 7,200,000 | - |
| Instance | Asset | Current Debt Ceiling | Recommended Debt Ceiling |
|---|---|---|---|
| Core | USDe | 50,000,000 | 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 ARFC.
Copyright
Copyright and related rights waived via CC0