Summary
A proposal to:
- Increase USDtb’s supply 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.
USDtb (Ethereum)
USDtb has again quickly reached 100% supply cap utilization, while its borrow cap utilization is at 51% and rising.
Supply Distribution
The supply of USDtb remains highly concentrated, with the top position continuing to account for over 99% of the total supply. This address has previously been identified as related to Ethena’s Coinbase Prime Custody, which currently holds over $1.27B USDtb that has not been deposited in Aave; this is approximately 87% of the total USDtb supply.
As stated in the previous recommendation, this level of concentration can initially appear as a risk. However, the supplier address serves as a reserve, frequently receiving inflows from Ethena’s custody infrastructure, and given the inability to use USDtb as collateral, it does not pose any liquidation risk.
Liquidity
USDtb on-chain liquidity remains stable; however, it is concentrated on Curve with a pool size of $20M, the same value as during our last recommendation. This is sufficient to support an increase in USDtb’s supply cap.
Recommendation
Given the limited risks posed by USDtb as a non-collateral asset, we support a further supply cap increase; it is not necessary to adjust the borrow cap at this time.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum | USDtb | 100,000,000 | 200,000,000 | 40,000,000 | - |
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