Summary
A proposal to increase MKR’s supply cap on the Ethereum Core instance. The main rationale behind such an increase is to facilitate the execution of this treasury-focused AIP by TokenLogic to allow the migration of collected aMKR (Aave V2) to aEthMKR (Aave V3), thereby creating a relatively insignificant increase, given the state of the MKR token today.
MKR (Ethereum Core)
The supply cap for MKR has reached 100% utilization, and its borrow cap is at 22%.
Supply Distribution
The top supplier holds 76% of the total distribution, posing a significant concentration risk. However, as this user is borrowing another stablecoin, USDT, and maintains a high health score of 1.94, it does not present a significant concern at this time.
The remaining top suppliers either maintain a high health score or have no borrowing activity, significantly reducing liquidation risk.
Given its status in Isolation Mode, USDC is the largest borrowed asset against MKR, accounting for approximately 93% of the total borrowed asset distribution.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing the supply cap to 23.5K MKR.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | MKR | 22,500 | 23,500 | 1,980 | - |
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 update.
Copyright
Copyright and related rights waived via CC0