Base
Simple Summary
Risk Parameters
A proposal to adjust the following risk parameters:
| Risk Parameter | Recommended Value | Current Value |
|---|---|---|
| rETH Collateral Factor | 81% | 78% |
| MORPHO Reserve Factor | 30% | 35% |
| wrsETH Supply Cap | 200 | 1000 |
| MORPHO Supply Cap | 2,000,000 | 4,000,000 |
*Cap Recommendations will be implemented via Guardian
IR Parameters
A proposal to adjust IR curve for USDC, cbBTC, LBTC, tBTC and VIRTUAL:
| USDC IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.9 | 0.9 |
| Multiplier | 0.0515 | 0.049 |
| Jump Multiplier | 9 | 9 |
| cbBTC IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.35 | 0.7 |
| Multiplier | 0.07 | 0.07 |
| Jump Multiplier | 2 | 2 |
| LBTC IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.35 | 0.7 |
| Multiplier | 0.07 | 0.07 |
| Jump Multiplier | 2 | 2 |
| tBTC IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.35 | 0.7 |
| Multiplier | 0.07 | 0.07 |
| Jump Multiplier | 2 | 2 |
| VIRTUAL IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.45 | 0.6 |
| Multiplier | 0.23 | 0.23 |
| Jump Multiplier | 5 | 5 |
Rationale
Interest Rate (IR) Parameters
USDC
Source: Dune Dashboard
Gauntlet recommends reducing stablecoin borrowing APRs by approximately 25 basis points to better align with prevailing market conditions. While SSR has remained unchanged, DSR has been trending downward, indicating a softening demand environment and supporting a more accommodative borrowing rate to stimulate protocol activity.
Recommended USDC IR Curve
Projected APRs for USDC
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink | 4.41% | 3.57% |
| 100 | 94.41% | 84.97% |
Current APRs for USDC
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink | 4.63% | 3.75% |
| 100 | 94.63% | 85.17% |
WETH
WETH utilization has been hovering near or slightly below the kink threshold after last rate change. Gauntlet recommends maintaining current borrowing APRs to allow the market to naturally reach equilibrium without introducing rate-driven interventions.
cbBTC, LBTC and tBTC
Gauntlet recommends increasing the kink point on the interest rate curve for BTC wrapper assets to enhance capital efficiency and better accommodate user demand. The current kink is set at 35%, which can result in rapidly escalating borrowing rates once utilization exceeds that threshold. We propose raising the kink to 70%, allowing for more stable and predictable borrowing costs even as utilization rises above 35%. This adjustment aligns the rate model more closely with observed usage patterns and encourages continued borrowing activity without triggering steep rate hikes.
LBTC and tBTC Supply and Utilization
Recommended IR Curve for cbBTC, LBTC and tBTC
Projected APRs for cbBTC, LBTC and tBTC
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink (70%) | 4.90% | 3.26% |
| 100 | 134.90% | 128.15% |
Current APRs for cbBTC, LBTC and tBTC
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink (35%) | 2.45% | 0.81% |
| 100 | 132.45% | 125.83% |
Current and Projected IR Curve
VIRTUAL
Gauntlet recommends increasing the kink of VIRTUAL’s IR settings to improve capital efficiency and support borrowing demand at higher utilization levels. Raising the kink allows VIRTUAL to maintain relatively stable borrow rates even as utilization climbs, thereby avoiding rate spikes that could discourage borrowing. This adjustment helps optimize asset usage while preserving healthy liquidity conditions across a broader range of utilization scenarios.
VIRTUAL Supply and Utilization
Recommended IR Curve for VIRTUAL
Projected APRs for VIRTUAL
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink (60%) | 13.80% | 5.80% |
| 100 | 288.80% | 202.16% |
Current APRs for VIRTUAL
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink (45%) | 10.35% | 3.26% |
| 100 | 285.35% | 199.74% |
Current and Projected IR Curve
Collateral Factor (CF)
Gauntlet recommends lowering the collateral factor for rETH from 81% to 78%.
Top USDC Suppliers’ Positions
Liquidating the largest positions —excluding looping positions—would result in approximately 30% slippage.
The below table shows the user positions of all risk-off liquidations that would occur due to the CF decreases.
| User Address | Total Supply Balance (USD) | Total Borrow Balance (USD) | Initial Borrow Usage | New Borrow Usage | Initial Health Factor | New Health Factor |
|---|---|---|---|---|---|---|
| 0x96fa56a6292a8975343f47cd0c81f4663f9ebff6 | 8.30814 | 6.41898 | 0.9776 | 1.0159 | 1.023 | 0.984 |
There would be ~$6 borrow amount to be liquidated.
- Please be mindful of positions at risk of liquidation. Consider adding additional collateral to reduce the risk.
Cap Recommendations
wrsETH
Gauntlet will use Cap Guardian to increase the Supply Cap for wrsETH:
| Asset | Chain | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| wrsETH | Base | 200.0 | 1,000 | 430 | No Change |
On April 30, to mitigate risks stemming from an excess supply of minted rsETH, we recommended temporarily reducing the caps for wrsETH. Following this, on May 1, Kelp DAO announced that all operations had returned to normal, with the excess tokens burned and rsETH deposits and withdrawals fully resumed. In light of these developments, we recommend restoring the wrsETH caps to re-enable new deposits.
Top Supplier Positions
Slippage
MORPHO
Gauntlet will use Cap Guardian to increase the Supply Cap for MORPHO:
| Asset | Chain | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| MORPHO | Base | 2,000,000 | 4,000,000 | 1,000,000 | No Change |
Utilization
Top Positions
Slippage
Liquidating non-looping positions would lead to an estimated slippage of around 30%.
Gauntlet continuously monitors cap utilization and provides timely recommendations. You can find our latest cap recommendations here.
Reserve Factor
Gauntlet recommends raising the reserve factor for MORPHO from 30% to 35% in response to recent market dynamics. Specifically, the protocol has observed a sustained decline in utilization, primarily driven by two key factors: heightened demand for borrowing stablecoins using MORPHO as collateral, and a concurrent surge in MORPHO supply on the platform.
Increasing the reserve factor would help rebalance incentives by allocating an additional share of interest to the reserve.
Projected APRs for MORPHO
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink | 10.35% | 3.03% |
| 100 | 285.35% | 185.48% |
Current APRs for MORPHO
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink | 10.35% | 3.26% |
| 100 | 285.35% | 199.74% |
Optimism
Simple Summary
Risk Parameters
A proposal to adjust the following risk parameters:
| Risk Parameter | Current Value | Recommended Value |
|---|---|---|
| wrsETH Supply Cap | 20 | 400 |
*Cap Recommendations will be implemented via Guardian
IR Parameters
A proposal to adjust IR parameters for USDC, USDT, DAI:
| USDC IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.9 | 0.9 |
| Multiplier | 0.0515 | 0.049 |
| Jump Multiplier | 9 | 9 |
| USDT IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.9 | 0.9 |
| Multiplier | 0.0515 | 0.049 |
| Jump Multiplier | 9 | 9 |
| DAI IR Parameters | Current | Recommended |
|---|---|---|
| Base | 0 | 0 |
| Kink | 0.9 | 0.9 |
| Multiplier | 0.0515 | 0.049 |
| Jump Multiplier | 9 | 9 |
Rationale
Interest Rate (IR) Parameters
USDC, DAI and USDT
For the same reasons cited in the Base market, we recommend decreasing the borrow APR at kink by an additional ~25bps to mirror demand for leverage.
Recommended USDC, DAI and USDT IR Curve
Projected APRs for USDC, DAI and USDT
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink | 4.41% | 3.57% |
| 100 | 94.41% | 84.97% |
Current APRs for USDC, DAI and USDT
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0% | 0% |
| kink | 4.63% | 3.75% |
| 100 | 94.63% | 85.17% |
WETH
For the same reasons cited in the Base market, we recommend maintaining the current interest rate setting for WETH.
Cap Recommendations
With the same motivation cited in Base section, Gauntlet will use Cap Guardian to increase the Supply Cap for wrsETH:
| Asset | Chain | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| wrsETH | Optimism | 20.0 | 400 | 160 | No Change |
Gauntlet continuously monitors cap utilization and provides timely recommendations. You can find our latest cap recommendations here.
Moonbeam
Simple Summary
Risk Parameters
A proposal to adjust the following risk parameters:
| Risk Parameter | Current Value | Recommended Value |
|---|---|---|
| WGLMR Borrow Cap | 3M | 0.10 |
| xcUSDC Borrow Cap | 120K | 0.10 |
| USDC.wh Borrow Cap | 60K | 0.10 |
| FRAX Borrow Cap | 5K | 0.10 |
| WETH.wh Borrow Cap | 0.10 | No Change |
| WBTC.wh Borrow Cap | 0.10 | No Change |
| FRAX Collateral Factor | 39% | 31% |
| USDC.wh Collateral Factor | 17% | 14% |
| WBTC.wh Collateral Factor | 9% | 6% |
| WGLMR Collateral Factor | 51% | 47% |
| xcUSDC Collateral Factor | 50% | 45% |
| xcUSDT Collateral Factor | 60% | 55% |
*Cap Recommendations will be implemented via Guardian
Rationale
Caps
Gauntlet recommends reducing borrow caps for assets on Moonbeam to simplify management and ensure more efficient protocol maintenance.
| Asset | Current Borrow Cap | Average Borrow Cap Usage (Past Week) |
|---|---|---|
| WGLMR | 3.00M | 213.17% |
| xcUSDC | 120.00K | 171.82% |
| xcDOT | 75.00K | 99.76% |
| USDC.wh | 60.00K | 199.39% |
| FRAX | 5.00K | 15.62% |
| WETH.wh | 0.10 | 7.65K% |
| WBTC.wh | 0.10 | 3.08% |
Collateral Factor
We continue recommending a reduction in Collateral Factors across assets as follows.
- Decrease FRAX Collateral Factor from 39% to 31%
- Decrease USDC.wh Collateral Factor from 17% to 14%
- Decrease WBTC.wh Collateral Factor from 9% to 6%
- Decrease WGLMR Collateral Factor from 51% to 47%
- Decrease xcUSDC Collateral Factor from 50% to 45%
- Decrease xcUSDT Collateral Factor from 60% to 55%
The proposed reduction in CFs will trigger liquidations of positions totaling ~$10K in supplies and ~$5K in borrows. The positions poised to be liquidated are listed below.
| User Address | Total Supply Balance (USD) | Total Borrow Balance (USD) | Initial Borrow Usage | New Borrow Usage | Initial Health Factor | New Health Factor |
|---|---|---|---|---|---|---|
| 0xc6302894cd030601d5e1f65c8f504c83d5361279 | 5642.26 | 1845.35 | 0.8386 | 1.055 | 1.192 | 0.948 |
| 0xc205fb65ab4c6913f558c3d530b734e9404b8bfe | 3560.26 | 1646.32 | 0.9441 | 1.0505 | 1.059 | 0.952 |
| 0xb0a80c11765af2692be0646ecd3ac859abbc65e6 | 537.817 | 265.455 | 0.9678 | 1.0502 | 1.033 | 0.952 |
| 0x10115ea72868edacc4fda8f398043ca593f5b830 | 99.9189 | 33.5347 | 0.8606 | 1.0826 | 1.162 | 0.924 |
| 0xe6c94137b9276def90c19776679ed9723fa701bd | 213.409 | 31.2287 | 0.8608 | 1.2194 | 1.162 | 0.82 |
| 0xbc44fa4c80f1187490ae5f38747d0ad3b8402898 | 43.2482 | 20.641 | 0.9358 | 1.0155 | 1.069 | 0.985 |
| 0xf915b23769a4d1de0cc4dd152013c1aa4c115ec1 | 31.484 | 15.1942 | 0.9463 | 1.0268 | 1.057 | 0.974 |
| 0x2108a7d308e8e9c4de44a091e34186ba37962ab4 | 53.9897 | 11.5992 | 0.825 | 1.0795 | 1.212 | 0.926 |
| 0x0e61a5d840b883d234940c738cf49a2aebfaf1c8 | 90.7303 | 11.3336 | 0.7348 | 1.041 | 1.361 | 0.961 |
| 0xbbf5f02b352f6743181bd63b194410d26dcfa812 | 150.625 | 11.0156 | 0.8126 | 1.2189 | 1.231 | 0.82 |
| 0x26342d43cdd34a3af30da40502fef18f2bbf3dcf | 51.3439 | 8.11925 | 0.9302 | 1.3178 | 1.075 | 0.759 |
There would be a total of $4K liquidatable borrows and $10K supply due to the CF decreases.
- Please be mindful of positions at risk of liquidation. Consider adding additional collateral to reduce the risk.
Moonriver
A proposal to adjust the following risk parameters:
| Risk Parameter | Current Value | Recommended Value |
|---|---|---|
| FRAX Borrow Cap | 125.00K | 0.1 |
| WMOVR Borrow Cap | 4.00K | 0.1 |
*Cap Recommendations will be implemented via Guardian
Rationale
Caps
Gauntlet recommends reducing borrow caps for assets on Moonriver to simplify management and ensure more efficient protocol maintenance.
| Asset | Current Borrow Cap | Average Borrow Cap Usage (Past Week) |
|---|---|---|
| FRAX | 125.00K | 63.13% |
| WMOVR | 4.00K | 99.99% |
Risk Dashboard
The community should use Gauntlet’s Moonwell Base Risk Dashboard to better understand the updated parameter suggestions and general market risk in Moonwell BASE.
Methodology
This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.
Gauntlet’s parameter recommendations are driven by an optimization function that balances 3 core metrics: insolvencies, liquidations, and borrow usage. Parameter recommendations seek to optimize for this objective function. Our agent-based simulations use a wide array of varied input data that changes on a daily basis (including but not limited to asset volatility, asset correlation, asset collateral usage, DEX / CEX liquidity, trading volume, expected market impact of trades, and liquidator behavior). Gauntlet’s simulations tease out complex relationships between these inputs that cannot be simply expressed as heuristics. As such, the input metrics we show below can help understand why some of the param recs have been made but should not be taken as the only reason for recommendation. To learn more about our methodologies, please see the Helpful Links section at the bottom.
Quick Links
Please click below to learn about our methodologies:
Gauntlet Parameter Recommendation Methodology
Gauntlet Model Methodology
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