[Anthias Labs] Risk Parameter Recommendations (4/28/26)
Anthias Labs proposes the following parameter changes for the month of May. For more information on current parameters, please refer to our monitoring dashboard here.
Base
Summary
Risk Parameters
| Parameters | Current Value | Recommended Value |
|---|---|---|
| VIRTUAL Reserve Factor | 35% | 99% |
| cbETH Reserve Factor | 20% | 99% |
| cbXRP Reserve Factor | 35% | 99% |
| cbXRP Borrow Cap | 1.6M | 0.01 |
IR Parameters
| VIRTUAL IR Parameters | Current Value | Recommended Value |
|---|---|---|
| Base | 0 | 0.01 |
| Kink | 0.7 | 0 |
| Multiplier | 0.23 | 0 |
| Jump Multiplier | 5 | 0 |
| cbXRP IR Parameters | Current Value | Recommended Value |
|---|---|---|
| Base | 0 | 0.01 |
| Kink | 0.6 | 0 |
| Multiplier | 0.134 | 0 |
| Jump Multiplier | 5 | 0 |
| cbETH IR Parameters | Current Value | Recommended Value |
|---|---|---|
| Base | 0 | 0.01 |
| Kink | 0.45 | 0 |
| Multiplier | 0.081 | 0 |
| Jump Multiplier | 3 | 0 |
Rationale
The table below quantifies the ongoing cost of bad debt-bearing markets at their current interest rates. Across the listed markets, bad debt is accruing approximately $19,589 per month in additional interest. This interest does not represent productive revenue from healthy borrowers; it is accruing on balances that will not be repaid. There are two primary ways to reduce this figure: (1) repay bad debt using available reserves, which directly reduces the outstanding toxic balances, or (2) proactively adjust market parameters, which minimizes future interest accrual while the protocol determines the appropriate path for recapitalization.
Last month, some reserves were already utilized to partially repay bad debt across several of the affected markets. This included repayments of 953,335.00 VIRTUAL, 522,946.30 cbXRP, 81,844.16 USDC, and 59.1459 cbETH on behalf of the largest insolvent accounts. These repayments reduced the outstanding bad debt balance and helped limit further interest accrual. However, as shown in the table below, the remaining interest burden is still significant.
| Reserves (tokens) | Bad Debt (tokens) | Borrow Rate Snapshot (APY) | Estimated Monthly Interest on Bad Debt (USD) | |
|---|---|---|---|---|
| cbETH | 0.6708 | 672.3100348 | 3.58 | $ 5,166.56 |
| cbXRP | 1949.3515 | 755714.7424 | 3.93 | $ 3,440.20 |
| VIRTUAL | 14171.9282 | 1251529.239 | 9.64 | $ 6,907.06 |
| WETH | 72.8837 | 241.9081734 | 0.73 | $ 336.25 |
| USDC | 60309.2133 | 389740.0446 | 4.76 | $ 1,545.97 |
| MORPHO | 14717.8082 | 119560.0293 | 0.92 | $ 175.99 |
| wstETH | 35.6241 | 82.04643462 | 1.59 | $ 305.56 |
| AERO | 296894.0514 | 470081.7759 | 6.24 | $ 1,136.66 |
| EURC | 24996.822 | 167033.4598 | 3.46 | $ 563.97 |
| cbBTC | 1.774 | 0.3125244801 | 0.54 | $ 10.81 |
| Total | $ 19,589.04 |
cbETH, cbXRP, & VIRTUAL
In the cbETH, cbXRP, and VIRTUAL markets, over 90% of total borrows are bad debt: VIRTUAL stands at 98.9% with 1,251,529.24 bad debt out of 1,264,988.04 borrowed, cbXRP at 92.1% with 755,714.74 bad debt out of 820,388.47 borrowed, and cbETH at 96.6% with 672.31 bad debt out of 696.33 borrowed. At these levels, the markets are no longer functioning as productive lending markets. Instead, most of the outstanding debt is unrecoverable, meaning the protocol is continuing to accrue interest on balances that will never be repaid.
Bad debt distorts the market’s accounting and creates misleading supplier incentives. In a healthy market, borrower interest accrues to suppliers and reserves because borrowers are expected to repay. In these markets, however, most of the interest is accruing on toxic positions. As a result, suppliers may see inflated APYs that are not supported by actual recoverable cash flows. The protocol is effectively accruing an IOU to suppliers based on interest from debt that cannot be collected, increasing the amount that would need to be covered when the market is eventually recapitalized and making the accounting harder to reconcile over time.
To ease the interest burden on this debt and stop the protocol from bleeding losses by owing suppliers interest on unrecoverable positions, we recommend the following adjustments:
| Parameter | Recommendation | Rationale |
|---|---|---|
| Borrow cap | 0.01 |
Disables new borrowing. |
| Base rate | 1% |
Flattens the interest rate curve and slows the growth of bad debt. |
| Reserve factor | 99% |
Redirects nearly all interest accrual into protocol reserves. |
These changes will effectively reduce the monthly interest burden in the cbETH, cbXRP, and VIRTUAL markets to near zero by lowering borrower rates to 1% and directing nearly all residual interest to protocol reserves. For the remaining markets, the bad debt interest burden can be further reduced by using available reserves to repay toxic balances directly.
Moonbeam
Summary
Risk Parameters
| Parameters | Current Value | Recommended Value |
|---|---|---|
| GLMR Reserve Factor | 50% | 99% |
IR Parameters
| GLMR IR Parameters | Current Value | Recommended Value |
|---|---|---|
| Base | 0 | 0.01 |
| Kink | 0.6 | 0 |
| Multiplier | 0.15 | 0 |
| Jump Multiplier | 3 | 0 |
Rationale
GLMR
For the same reason as cbETH, cbXRP, and VIRTUAL on Base, we wish to stop the interest on GLMR bad debt. Currently 96% of all borrows are bad debt. We recommend taking the same actions: flattening the IR curve, setting reserve factor to 99%.
Additional Links
Anthias Labs has not been compensated by any third party for any statements made. All opinions and suggestions provided are based solely on our independent analysis and are not influenced by external entities.