Analysis
Gauntlet has been monitoring METIS liquidity of late given the recent surge in METIS price. In particular, it is important to ingest data over a long enough time frame rather than focus on the short term price movements.
Our analysis for enabling an asset as collateral considers data including the following to assess the risk factors when recommending parameters:
- Market cap of the token
- Total supply
- Largest liquidity sources (exchanges including CEX and DEX)
- Average daily trading volume on CEX and DEX
- Concentration Risk
- Other DEX metrics
Metis’ market cap of $408M and 30-day-average daily volume across multiple exchanges exhibits signals of liquidity and market interest for the asset. The asset’s level of liquidity in the market reduces the risk of price manipulation attacks.
| Metric | Value |
|---|---|
| Market Cap | $414mm |
| Total Supply | 10,000,000 |
| Circulating Supply | 5,265,547 |
| 30d AVG Volume | 4,405,895 |
The largest liquidity sources for METIS are Uniswap (DEX) and OKX (CEX).
| Uniswap | OKX | |
|---|---|---|
| TVL | $4.3mm | - |
| 24h Trading Volume | $1.6mm | $3,967,883 |
Recommendation
Should the community wish to enable METIS as collateral, we provide the following recommendations, noting conservative risk parameters and minimal capital efficiency.
| Parameters | Gauntlet Recommendation |
|---|---|
| Isolation Mode | Yes |
| Enable Borrow | Yes |
| Enable Collateral | Yes |
| Loan to Value | 30% |
| Liquidation Threshold | 40% |
| Liquidation Bonus | 10% |
| Liquidation Protocol Fee | 10% |
| Debt Ceiling | $1M |
If a METIS supplier were to max out the $1M debt ceiling and become liquidatable at a 40% LT, $2.5M METIS collateral would be collateralized against $1M stablecoin. Currently a $2.5M METIS / m.USDC swap would incur about 65% DEX slippage. While high, the conservative LTV/LT parameters provide a large buffer to insolvency during liquidations.
Given the m.USDC incentives on v3 Metis, this debt ceiling may be utilized quickly, noting that m.USDC borrowers may solely be interested in receiving METIS rewards.