Simple Summary
Gauntlet will use Cap Guardian to increase Supply and Borrow Caps for WETH and USDC.
| Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap | |
|---|---|---|---|---|
| WETH | 28,000 | 40,000 | 20,000 | 28,000 |
| USDC | 40,000,000 | 56,000,000 | 36,400,000 | 52,000,000 |
Gauntlet will be utilizing the Cap Guardian to enact this change as voted by the community within this forum post and proposal.
Supporting Data
WETH Cap Recommendations
Cap Usage
The WETH Supply and Borrow Caps has increased over the 75% threshold.
WETH positions
The top 10 positions supplying WETH are borrowing correlated assets with exception for two positions borrowing USDC. Gauntlet will continue to monitor these positions. These top 10 positions make up more than 50% of all WETH borrows
Half of the top 10 suppliers are borrowing stables amounting to a total of ~$6.8M in borrows. Four of the large positions are borrowing recursively and 1 positions has no debt. The current DEX liquidity is sufficient to accommodate further capital inflows, considering recursive behavior of user positions.
Liquidations at Risk (LaR)
Currently, about $4.6M of WETH are at risk of liquidations, the 25% DEX slippage for WETH stands at $41.6M or 13,000 WETH. The liquidity on-chain can absorb the LaR should they hit the threshold for liquidations.
USDC Cap Recommendations
Cap Usage
The USDC’s Supply and Borrow Caps have increased over the 75% threshold.
USDC positions
The top 10 positions supplying USDC are borrowing recursively with exception for two positions borrowing WETH. Gauntlet will continue to monitor these positions. There’s sufficient on-chain liquidity to carry on liquidations for these user positions should tail-end risk materialize.
