Gauntlet Guardian - Cap Recommendations for DAI and rETH
Gauntlet’s Base Recommendations
Simple Summary
Gauntlet will use Cap Guardian to increase Borrow Caps on rETH on Base, and decrease Supply caps for DAI.
| Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap | |
|---|---|---|---|---|
| DAI | 7,500,000 | 6,500,000 | 6,000,000 | No Change |
| rETH | 600 | No Change | 100 | 200 |
Gauntlet will be utilizing the Cap Guardians to enact this change as voted by the community within this forum post and proposal.
Supporting Data
DAI Cap Recommendations
Borrow Cap Usage
The DAI Borrow Cap has increased over the 75% threshold.
DAI Circulating Supply and Holders
However, Gauntlet doesn’t recommend an increase in Borrow Cap and instead suggests a decrease in Supply cap to 6,500,000. This is due to the drop in circulating supply of DAI on Base to 7,500,000 from the highs of 24,000,000 DAI. Reducing the supply cap along with moderating rewards rate for DAI would constitute a two-pronged approach in reducing risk for DAI on Moonwell Base. The above recommendations are made as preventive measure to not accumulate bad-debt to the protocol.
The largest positions supplying DAI are borrowing corellated assets or borrrowing recursively. Gauntlet will continue to monitor these positions closely.
DEX Liquidity and Cap Usage
| Asset | Borrow Cap | Supply Cap | Borrow Cap Usage | Supply Cap Usage | DEX 25pct Slippage Token |
|---|---|---|---|---|---|
| DAI | 6,000,000 | 7,500,000 | 91% | 92% | 2,045,003 |
rETH Cap Recommendations
rETH Circulating Supply and Holders
Gauntlet recommends increasing the borrow cap for rETH to 200 following increase in rETH circulating supply and holders.
Top rETH Suppliers
Most top rETH collateral positions either borrowing recursively or with highly correlated assets.
DEX Liquidity and Cap Usage
| Asset | Borrow Cap | Supply Cap | Borrow Cap Usage | Supply Cap Usage | DEX 25pct Slippage Token |
|---|---|---|---|---|---|
| rETH | 100 | 600 | 100% | 66% | 320.58 |
Gauntlet’s Moonbeam Recommendations
Simple Summary
Gauntlet has identified the breach in 75% threshold for Borrow caps for USDC.wh on Moonwell Moonbeam. However, Gauntlet recommends no increase in Borrow caps.
| Current Borrow Cap | Recommended | |
|---|---|---|
| USDC.wh | 2,400,000 | No Change |
Supporting Data
USDC.wh Cap Recommendations
Borrow Cap Usage
The USDC.wh Borrow Cap has increased over the 75% threshold.
USDC.wh Circulating Supply and Holders
However, the circulating supply of USDC.wh is currently at ~3mm. Increasing the borrow cap further would pose concentration risk and accrual of bad debt to the protocol. Furthermore, there isn’t enough liquidity to support USDC.wh in the event of maximum drawdown of 25%. See liquidity on top DEXs on Moonbeam below
| DEX | Liquidity |
|---|---|
| Stellaswap | 147k |
| Beamswap | 193k |
See sources - Stellaswap and Beamswap
Quick Links
Please click below to learn about our methodologies:
Gauntlet Parameter Recommendation Methodology
Gauntlet Model Methodology
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