Summary
A proposal to:
- Increase stS’s supply cap on the Sonic 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.
stS (Sonic)
stS has reached 100% supply cap utilization.
Supply Distribution
The supply of stS is concentrated, with the top supplier accounting for 55% of the total distribution. However, we do not view this as a significant concern, as the position is borrowing wS, which is a highly correlated asset and therefore reduces the risk of liquidation.
The remaining top suppliers are either borrowing wS, not engaged in any borrowing activities, or maintaining high health scores, which significantly reduces the likelihood of liquidations.
The largest borrowed asset against stS is wS, accounting for 90% of the total borrowed assets. This high correlation significantly lowers the likelihood of large scale liquidations.
Liquidity
stS’ on-chain liquidity is strong; a 5M stS to USDC.e swap can be completed at less than 4% price slippage.
Recommendation
Given user behavior and strong on-chain liquidity, we recommend doubling stS’ supply cap.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Sonic | stS | 30,000,000 | 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