On Chain Liquidity Update
We’d like to provide an update on the current state of on-chain DEX liquidity for cbXRP.
Liquidity Data
June 6, 2025
| Exchange | Pair | Volume (24 hr) | TVL | link |
|---|---|---|---|---|
| Aerodrome SlipStream | cbXRP / WETH | $34.95K | $620.51K | cbXRP/WETH - Coinbase Wrapped XRP Price on Aerodrome SlipStream with 1% Fee | GeckoTerminal |
| Aerodrome SlipStream | cbXRP / cbBTC | $500.36K | $283.50K | cbXRP/cbBTC - Coinbase Wrapped XRP Price on Aerodrome SlipStream with 0.25% Fee | GeckoTerminal |
June 11, 2025
| Exchange | Pair | Volume (24 hr) | TVL | link |
|---|---|---|---|---|
| Aerodrome SlipStream | cbXRP / WETH | ~$340K | ~$605K | cbXRP/WETH - Coinbase Wrapped XRP Price on Aerodrome SlipStream with 1% Fee | GeckoTerminal |
| Aerodrome SlipStream | cbXRP / cbBTC | ~$6M | ~$1M | cbXRP/cbBTC - Coinbase Wrapped XRP Price on Aerodrome SlipStream with 0.25% Fee | GeckoTerminal |
Proposed Caps
Gauntlet proposed the following caps for cbXRP:
| Parameter | Value |
|---|---|
| Supply Cap | 1M cbXRP |
| Borrow Cap | 500K cbXRP |
Slippage
Currently you can swap 400K cbXRP for USDC while incurring less than 7% slippage (liquidation bonus). This accounts for roughly 73% of liquidatable collateral if supply and borrow caps are fully utilized at the recommended parameters. This indicates that cbXRP has sufficient DEX liquidity to be safely used as collateral, given the proposed caps. In a worst-case scenario requiring significant collateral liquidation, it can be executed entirely on DEXs.
Bad Debt Scenarios in Lending Protocols
For context, bad debt in a lending protocol can arise in two primary scenarios.
Scenario 1: Unprofitable Liquidations Due to Slippage
In the first scenario, liquidations become unprofitable because the collateral cannot be sold back to stablecoins at a profitable rate, primarily due to slippage caused by limited liquidity on DEXs. As a result, liquidators lack the incentive to liquidate these positions. If the collateral’s value continues to decline below the loan amount, bad debt accumulates as the protocol absorbs the loss.
Scenario 2: Profitable Liquidations with Inaccessible Funds
The second scenario occurs when liquidations are profitable, but liquidators cannot access the necessary funds to execute them. This could happen due to liquidity constraints or delays in acquiring the debt asset. If the collateral’s price drops rapidly during this period, its value may fall below the loan amount before liquidation is completed, leading to bad debt.
For cbXRP, these risks are mitigated by its unique properties:
- Scenario 1: XRP’s high liquidity on CEXs ensures that significant liquidation volumes will generally be profitable. Liquidators can easily redeem cbXRP for XRP on a 1:1 basis through Coinbase, tapping into deeper liquidity compared to that on DEXs.
- Scenario 2: Although the on-chain supply of cbXRP is currently limited due to it being brand new, liquidators can manually bridge XRP to Base via Coinbase when needed. This ensures access to sufficient funds even if on-chain liquidity is constrained.
Conclusion
We will provide necessary updates to risk parameters as cbXRP matures as an asset. In its current state, we’re confident that cbXRP can be used for lending purposes in Moonwell’s Core markets with the recommended parameters.