Gauntlet’s cbBTC Risk Recommendations
Summary
We recommend onboarding cbBTC as collateral on Moonwell Base deployment conditional to significant liquidity being added on DEXes. Due to the market demand and future growth of cbBTC liquidity on Base we think it appropriate to list the asset.
Risk Parameter Recommendations
| Parameters | Values |
|---|---|
| CF | 81% |
| Supply Cap | 0.001 |
| Borrow Cap | 0.0005 |
| Protocol Seize Share | 30% |
IR Recommendations
| IR Parameters | Recommended |
|---|---|
| Base | 0.02 |
| Kink | 0.6 |
| Multiplier | 0.065 |
| Jump Multiplier | 3.00 |
| Reserve Factor | 0.1 |
Supporting Data
Market Specifications
cbBTC is Coinbase’s wrapped version of BTC, given the strong success of cbETH on Base, we believe likely outcomes for cbBTC given the overarching speculation and skepticism regarding WBTC’s custodial process. At this point there aren’t any relevant markers for market data, however, due to the similar nature of cbBTC to WBTC, Gauntlet can recommend risk parameters that mirror WBTC.
Supply and Borrow Caps
Given no liquidity data, Gauntlet recommends supply and borrow caps that are sufficient to initialize the market. Depending on the prevailing liquidity conditions, Gauntlet will use Cap Guardian to adjust caps further. We currently recommend a supply cap of 0.001 cbBTC and borrow cap of 0.0005 cbBTC. These caps would be sufficient to initialize the market, while capping any risk to the protocol.
IR Parameter Specifications
We recommend setting the initial IR curves matching those of WBTC on Optimism. Gauntlet will monitor this asset and adjust IR parameters based on prevailing conditions.
cbBTC IR Curves
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0% | 2% | 0 |
| 60% | 5.9% | 3.18% |
| 100% | 125.9% | 113.1% |
Collateral Factor (CF) and Reserve Factor (RF)
For the CF and RF, we recommend aligning these parameters to the initial recommended parameters for WBTC on Optimism. Gauntlet recommends a CF of 81% and an RF of 10%.