Gauntlet will use Cap Guardian to increase the Supply and Borrow Cap for AERO.
| Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|
| AERO | 22,000,000 | 28,500,000 | 13,500,000 | 18,500,000 |
Gauntlet will be utilizing the Cap Guardian to enact this change as voted by the community within this forum post and proposal.
Supporting Data
AERO Borrowing
Top 50 Suppliers
Analysis of Moonwell’s top 50 suppliers reveals a bifurcation in AERO token utilization: approximately $4.9 million in AERO supplies are debt-free, while $4.2 million is collateralized against outstanding liabilities. This distribution, with 40% of AERO supplies maintaining a zero loan-to-value ratio, positions Moonwell as a leading venue for yield for AERO token holders.
The platform’s user behavior exhibits a propensity towards over-collateralization rather than leverage maximization, suggesting a risk-averse approach across user positions. Given this conservative utilization pattern, an increase in supply cap should further accommodate AERO suppliers without significantly altering the platform’s risk profile.
Current collateralization levels for AERO-backed positions are well within parameters to support efficient liquidation, should market conditions necessitate. This buffer provides a substantial margin of safety, mitigating potential systemic risks associated with rapid deleveraging scenarios.
AERO Liquidity
The current supply cap of 28.5M AERO, if liquidated would incur a slippage of ~25%. Compared to the current CF of 65%, there is sufficient buffer to accomodate large-scale slippages.
While the 25% depth in the AERO-USDC pool has shown improvement, the TVL of AERO across DEXs has declined, which could be attributed to the notional decrease in value of AERO. As discussed in our previous cap update, any further increases in caps will need to be approached with restrain and a risk-off strategy, particularly if liquidity continues to decrease.
Quick Links
Please click below to learn about our methodologies:
Gauntlet Parameter Recommendation Methodology
Gauntlet Model Methodology
By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.