# Gauntlet’s BASE/Moonbeam/Moonriver Recommendations (2024-03-26)

**URL:** <https://forum.moonwell.fi/t/gauntlet-s-base-moonbeam-moonriver-recommendations-2024-03-26/841>\
**Category:** Proposals\
**Tags:** moonriver, moonbeam, base\
**Created:** [March 27, 2024, 12:50am UTC](https://forum.moonwell.fi/t/gauntlet-s-base-moonbeam-moonriver-recommendations-2024-03-26/841 "2024-03-27T00:50:20Z")\
**Posts on this page:** 2\
**Page:** 1

<div class="post-metadata">

**Author:** ![Gauntlet](https://dub1.discourse-cdn.com/flex017/user_avatar/forum.moonwell.fi/gauntlet/32/780_2.png) [@Gauntlet](https://forum.moonwell.fi/u/Gauntlet)\
**Post date:** [March 27, 2024, 12:50am UTC](https://forum.moonwell.fi/t/gauntlet-s-base-moonbeam-moonriver-recommendations-2024-03-26/841/1 "2024-03-27T00:50:21Z")

</div>

# Base Recommendations

### Simple Summary

### Risk Parameters

A proposal to adjust 5 risk parameters:

| Risk Parameter | Current Value | Recommended Value |
| --- | --- | --- |
| WETH Supply Cap | 12,500 | 18,000 |
| WETH Borrow Cap | 10,500 | 14,000 |
| wstETH Supply Cap | 1,800 | 2,100 |
| wstETH Borrow Cap | 800 | 900 |
| USDbC RF | 15% | 20% |

\*Cap Recommendations will be implemented via Guardian

### IR Parameters

A proposal to adjust USDC’s IR curve:

| USDC IR Parameters | Current | Recommended |
| --- | --- | --- |
| Base | 0 | 0 |
| Kink | **0.8** | **0.9** |
| Multiplier | **0.065** | **0.067** |
| Jump Multiplier | **8.6** | **9.0** |

* * *

## Rationale:

### Risk Parameters

Based on simulation results, Gauntlet recommends increasing caps for wETH and wstETH. Gauntlet also recommends increasing reserve factor for USDbC to further ramp up migration to native USDC, improve capital efficiency and increase reserves for the protocol.

### Reserve Factor Recommendations

 ![Screenshot 2024-03-25 at 11.27.45 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/7/719ced475a6b526797b8eb63845e596c5cf980dd.png)

Gauntlet suggests raising Reserve Factors for USDbC to accelerate migration to USDC as well as catalyze deprecation of USDbC markets. USDbC has seen net outflows on the protocol prior to the Reserve Factor suggestion as seen int the above chart, whereas circulating supply for USDC has grown exponentially. By an RF increase from 15% to 20% brings USDbC’s Reserve Factor equivalent to DAI and will further improve reserves while users migrate to native USDC.

 ![Screenshot 2024-03-25 at 11.30.00 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/7/7c3f245715e1ffed771c1833ce91152e5d95a679.png)

### Cap Recommendations

Gauntlet suggests implementing a comprehensive adjustment to supply and borrow caps across various assets to optimize protocol performance and mitigate risks. This includes:

- **wstETH** - Scaling up both supply (1800 → 2100) and borrow caps (800 → 900) for wstETH, aligning with Gauntlet’s methodology for managing these parameters. Most of the top 10 suppliers borrow correlated assets.

 ![Screenshot 2024-03-25 at 1.15.11 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/7/7f22af5d06216e0896f303856d16db4c8d4c4741.png)

- **wETH** - Adjusting wETH supply (12,500 → 16,000) and borrow caps (10,500 → 13,000) on Base to accommodate growing supply and borrow balances, at the back of growing liquidity conditions. Most of the top 10 suppliers borrow recursively.

 ![Screenshot 2024-03-25 at 1.10.45 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/e/ebebdf559b28cb93f1bc5309374e3118aaf787bc.png)

#### BASE Liquidity

| Asset | Borrow Cap | Supply Cap | Borrow Cap Usage | Supply Cap Usage | DEX 25pct Slippage Token | DEX 25pct Slippage USD |
| --- | --- | --- | --- | --- | --- | --- |
| rETH | 200 | 700 | 60.66% | 86.90% | 285 | $1,081,610.04 |
| wstETH | 800 | 1,800 | 86.90% | 85.93% | 424 | $1,695,031.81 |
| cbETH | 1,800 | 6,000 | 39.76% | 62.05% | 719 | $2,639,493.86 |
| DAI | 1,500,000 | 2,000,000 | 87.31% | 89.28% | 506,770 | $506,957.55 |
| USDbC | 4,000,000 | 5,000,000 | 16.73% | 19.17% | 8,559,407 | $8,559,602.08 |
| USDC | 18,200,000 | 20,000,000 | 79.29% | 99.98% | 6,913,693 | $6,913,850.36 |
| WETH | 10,500 | 12,500 | 86.05% | 91.79% | 962 | $3,325,471.47 |

#### BASE Circulating Tokens and Supply Cap

| Asset | Circulating Supply Tokens | Supply Cap | Supply Cap / Circulating Supply Cap (%) | Supply Balance |
| --- | --- | --- | --- | --- |
| cbETH | 19,772 | 6,000 | 20.64 | $14,555,951 |
| WETH | 49,174 | 12,500 | 16.56 | $42,148,565 |
| DAI | 3,467,192 | 2,000,000 | 53.05 | $1,775,250 |
| USDC | 615,546,178 | 20,000,000 | 3.27 | $19,928,875 |
| rETH | 1099 | 700 | 63.69 | $2,427,575 |
| wstETH | 6,673 | 1,800 | 24.52 | $6,460,415 |
| USDbC | 73,045,404 | 5,000,000 | 9.25 | $ 1,188,701 |

### IR Parameters

### USDC IR Parameters

In line with current borrowing rates across the market while being competitive with peer protocols, Gauntlet recommends an increase in slope 1 to ~6% for USDC IR.

#### Demand for stablecoin borrowing

 ![Screenshot 2024-03-25 at 1.05.24 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/e/e08ea59ff77674b2958c794c3c64f14a670a4b2c.png)

Given the surge in leverage demand in recent times, it’s imperative to adjust slope 1 for stablecoins to align with market needs and anticipate potential rate hikes.

Moonwell’s current adjustment in slope 1 ensures competitive USDC borrow rates while upholding market equilibrium.

Additionally, Gauntlet recommends raising the uOptimal from 80% to 90% to enhance capital efficiency. This recommendation is substantiated by the following chart indicating that the largest positions either borrow recursively or remain debt-free.

 ![Screenshot 2024-03-25 at 1.06.53 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/0/0d04fa0a7d196bcac370e140a2283b00044845b2.png)

[Link](https://risk.gauntlet.xyz/protocols/moonwell/markets/base?fullscreen=market_health_timeseries_asset_utilization) to chart

Gauntlet will continue to monitor borrow rates across the market and utilization on Moonwell to further adjust IR parameters.

### Recommended USDC IR Curve

 ![Screenshot 2024-03-25 at 1.28.09 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/3/3141b5c168d539606f21e562c60ede98fe2fdafc.png)

#### Projected APRs

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 90 | 6.03 | 4.61 |
| 100 | 95.94 | 81.54 |

#### Current APRs

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 5.19 | 3.53 |
| 100 | 99.95 | 74.96 |

Gauntlet will monitor the utilization of wETH and consider additional actions if levels remain below kink.

### Risk Dashboard

The community should use [Gauntlet’s Moonwell Base Risk Dashboard](https://risk.gauntlet.network/protocols/moonwell/markets/base) to better understand the updated parameter suggestions and general market risk in Moonwell BASE.

# Moonbeam Recommendations

### Simple Summary

A proposal to adjust 7 total risk parameters:

| Parameter | Current Value | Recommended Value |
| --- | --- | --- |
| xcUSDC Collateral Factor | 10% | 15% |
| WGLMR Collateral Factor | 58% | 57% |
| WGLMR Borrow Cap | 22,500,000 | 10,000,000 |
| WBTC.wh Borrow Cap | 50 | 5 |
| WETH.wh Borrow Cap | 500 | 100 |
| xcUSDT Reserve Factor | 20% | 25% |
| xcUSDC Reserve Factor | 20% | 25% |

A proposal to make a IR curve adjustments for USDC.wh:

| USDC.wh IR Parameters | Current | Recommended |
| --- | --- | --- |
| BASE | 0 | 0 |
| Kink | 0.8 | 0.8 |
| Multiplier | **0.0845** | **0.0875** |
| Jump Multiplier | **7.2** | **7.4** |

A proposal to make an IR curve adjustments for xcUSDC:

| xcUSDC IR Parameters | Current | Recommended |
| --- | --- | --- |
| BASE | 0 | 0 |
| Kink | 0.8 | 0.8 |
| Multiplier | **0.0814** | **0.0875** |
| Jump Multiplier | **7.0** | **7.4** |

A proposal to make a IR curve adjustments for xcUSDT:

| xcUSDT IR Parameters | Current | Recommended |
| --- | --- | --- |
| BASE | 0 | 0 |
| Kink | 0.8 | 0.8 |
| Multiplier | **0.0814** | **0.0875** |
| Jump Multiplier | **7.0** | **7.4** |

A proposal to make an IR curve adjustments for FRAX:

| FRAX IR Parameters | Current | Recommended |
| --- | --- | --- |
| BASE | 0 | 0 |
| Kink | 0.8 | 0.8 |
| Multiplier | **0.01** | **0.0563** |
| Jump Multiplier | **0.01** | **4** |

* * *

### Rationale

### Risk Parameters

Gauntlet recommends increasing collateral factor for xcUSDC, while reducing collateral factor for WGLMR further due to liquidity concerns. It is also recommended to reduce borrow caps for WBTC.wh, ETH.wh and WGLMR due to low utilization and in the interest of capping the risk to the protocol. Gauntlet recommends an increase in Reserve Factors for xcUSDC and xcUSDT to boost protocol reserves while balancing capital inflows.

#### WGLMR, WBTC.wh and WETH.wh Borrow Caps

 ![Screenshot 2024-03-25 at 4.23.24 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/f/f4ee4e171e1ad1f9fab129de330792a921686609.png)

The borrow cap utilization for WBTC.wh, ETH.wh, and WGLMR has consistently remained below 30%, indicating that the borrow caps are set higher than the current utilization levels. This exposes Moonwell to a heightened degree of risk. Gauntlet suggests reducing the borrow caps for these assets to effectively manage and limit risk exposure. This recommendation is reinforced by the presence of weak liquidity for WBTC.wh, ETH.wh, and WGLMR.

**WBTC.wh Liquidity**

 ![Screenshot 2024-03-25 at 4.32.02 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/e/e368baaa79cf90490aa9cb07e52c195d699772c5.png)

**WETH.wh Liquidity**

 ![Screenshot 2024-03-25 at 4.32.40 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/c/c05ab564baad8ff6b6b5299013690686962ddbee.png)

**WGLMR Liquidity**

 ![Screenshot 2024-03-25 at 4.33.20 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/9/9f4b780acca99a019251a5d5827fcb47956970f9.png)

Although liquidity for WGLMR has been improving YTD, the liquidity is not sufficient to warrant the current borrow cap levels.

#### xcUSDC and WGLMR.wh Collateral Factor

xcUSDC’s on-chain liquidity has increased by 32.5% since the last month. The xcUSDC is redeemable for USDC across any chain via Circle’s APIs and Circle’s Mint platform. As such, liquidators can transfer to other parachains on Polkadot via the Polkadot Asset Hub (Has $18.6M in [Supply](https://www.circle.com/en/multi-chain-usdc/polkadot)), but will have to create an API via Circle to transfer to other chains. With gradual improvements in liquidity, on-chain circulating supply as well as liquidity on Polkadot’s asset hub, Gauntlet recommends increasing collateral factor to 15%. Gauntlet will monitor on-chain liquidity to further make any changes and will employ a phased approach to increase the collateral factor.

Gauntlet recommends reducing Collateral Factor of WGLMR to further cap risk, the decrease in Collateral Factor will not cause any liquidations on the protocol.

#### xcUSDC and xcUSDT Reserve Factor

An increase in reserve factor for xcUSDC and xcUSDT will boost projected annual reserves by $12,768 while incentivizing more organic borrowing over recursive borrowing. Gauntlet will monitor this market to see the impact of reserve factor on current user positions.

#### Moonbeam Liquidity

As we make recommendations through our risk models, we keep a constant check on the market liquidity and concentration risk to the Moonbeam protocol. In this regard, we would like to present some key liquidity figures for Moonbeam assets to share with the community. Since our last post, liquidity has decreased across all listed assets.

| Asset | Borrow Cap Relative to Supply | Total Circulating Supply | 25% Depth Token | 25% Depth USD |
| --- | --- | --- | --- | --- |
| WETH.wh | 29.97% | 1,668.86 | 14 | $37,000 |
| USDC.wh | 92.3% | 2,598,597 | 115,000 | $115,000 |
| WBTC.wh | 28.4% | 176.98 | 0.1 | $5,570 |
| xcUSDT | 84.2% | 951,702 | 115,000 | $115,000 |
| xcUSDC | 104.43% | 383,979 | 115,000 | $115,000 |
| xcDOT | 62.4% | 1,361,094 | 15,500 | $114,390 |
| FRAX | 98.7 | 5,319,872 | 140,000 | $140,000 |
| WGLMR | 233% | 9,616,587 | 280,000 | $114,104 |

### IR Parameters

Utilization for stablecoin assets continue to spill over the kink often. In order to further assess market equillibrium/efficiency and further curb high utilization Gauntlet recommends to increase Multiplier and Jump Mulitplier for the USDC.wh, xcUSDT and xcUSDC. This recommendation is in line with the increase of borrow rates across markets to match market wide borrow rates while still being competitive. The Mulitplier will move borrow APR at kink by ~25bps. Post the succses of [MIP-M22](https://moonwell.fi/governance/proposal/moonbeam?id=78), it is imperative to adjust IR curves for FRAX’s market to levels that jump start organic borrowing. Gauntlet recommends adjusting slope 1 to 4.5% APR at kink from the current 0.8%.

Gauntlet will monitor the impact of these adjustments and make any further adjustments if necessary to maintain utlization closer to the kink.

 ![Screenshot 2024-03-25 at 6.31.46 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/9/99d47de15b036fa916dca0b145dd3f76a0e60d2a.png)

#### USDC.wh

#### IR Curve for USDC.wh

 ![Screenshot 2024-03-25 at 6.44.29 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/0/0849c03da1b600510e0d70a6db6193af3f3a3f15.png)

#### Recommended Borrow and Supply APR for USDC.wh

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 7 | 4.2 |
| 100 | 155 | 116 |

#### Current Borrow & Supply APR for USDC.wh

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 6.76 | 4.05 |
| 100 | 150.76 | 113.06 |

### xcUSDC

#### IR Curve for xcUSDC

 ![Screenshot 2024-03-25 at 6.44.29 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/0/0849c03da1b600510e0d70a6db6193af3f3a3f15.png)

#### Recommended Borrow and Supply APR for xcUSDC

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 7 | 4.2 |
| 100 | 155 | 116 |

#### Current Borrow & Supply APR for xcUSDC

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 6.51 | 4.16 |
| 100 | 146.51 | 117.21 |

### xcUSDT

#### IR Curve for xcUSDT

 ![Screenshot 2024-03-25 at 6.44.29 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/0/0849c03da1b600510e0d70a6db6193af3f3a3f15.png)

#### Recommended Borrow and Supply APR for xcUSDT

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 7 | 4.2 |
| 100 | 155 | 116 |

#### Current Borrow & Supply APR for xcUSDT

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 6.51 | 4.16 |
| 100 | 146.51 | 117.21 |

### FRAX

#### IR Curve for FRAX

 ![Screenshot 2024-03-25 at 6.50.06 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/0/02d841db1dd4241f32ffe3f42bacf1faa781b75c.png)

#### Recommended Borrow and Supply APR for FRAX

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 4.5 | 3.0 |
| 100 | 84.5 | 71.82 |

#### Current Borrow & Supply APR for FRAX

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 0.8 | 0.54 |
| 100 | 1 | 0.85 |

### 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.

### Supporting Data

### Moonbeam 2% Market Depth for non-Stables

 ![Screenshot 2024-03-25 at 6.18.08 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/4/405abc31f31a55c414f0d1538cf30118c57253b3.png)

### Risk Dashboard

The community should use [Gauntlet’s Moonbeam Risk Dashboard](https://risk.gauntlet.xyz/protocols/moonwell/markets/moonbeam) to better understand the updated parameter suggestions and general market risk in Moonbeam.

VaR (Value at Risk) is defined as the expected insolvent amount (defined as excess debt relative to collaterals for any account) in a given day for a protocol under extremely adverse market conditions. We use our models to pre-configure specific risky market scenarios and stress test protocols via simulations leveraging current user positions, asset prices, and varied liquidity conditions. VaR is an estimate of the expected insolvencies for a single day given a severe correlated market downturn.

LaR is calculated as the expected liquidation amount under extremely adverse market conditions. It represents our estimation on what would happen if the market crashes, etc..

# Moonriver recommendations

## Simple Summary

A proposal to adjust 3 total risk parameter:

| Parameter | Current Value | Recommended Value |
| --- | --- | --- |
| FRAX Reserve Factor | 15% | 25% |
| FRAX Collateral Factor | 57% | 53% |
| WMOVR Borrow Cap | 40,000 | 20,000 |

A proposal to make an IR curve adjustments for FRAX:

| FRAX IR Parameters | Current | Recommended |
| --- | --- | --- |
| BASE | 0 | 0 |
| Kink | 0.8 | 0.8 |
| Multiplier | **0.05** | **0.0875** |
| Jump Multiplier | **2.5** | **7.4** |

* * *

### Rationale:

Despite the availability of FRAX bridge, FRAX liquidity on-chain has been dropping since the start of the month. Gauntlet recommends reducing collateral factor and increasing reserve factor to facilitate smoother liquidations and bolster reserves for the protocol.

**FRAX Liquidity**

 ![Screenshot 2024-03-25 at 7.29.56 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/4/4a2f520855e38f2143959e113111349c70085fe0.png)

### IR Parameters

FRAX utilization has consistently remained high over extended periods, largely due to the accumulation of interest on longstanding positions causing borrowing to exceed the supply. Gauntlet suggests increasing slope 1 to establish a borrowing APR of 7% at the kink point, while setting a supply APR of 4.2%. This adjustment aims to bring utilization closer to uOptimal levels.

**FRAX Utilization**

 ![Screenshot 2024-03-25 at 7.48.38 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/e/e6426afaf5b393536a6b7d01a5e78d734a17d5d5.png)

### Recommended FRAX IR Curve

 ![Screenshot 2024-03-25 at 8.28.09 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/5/52cf9f0db842932924d6e38cf3b94c4a88b9e2d2.png)

#### Projected APRs

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 7.0 | 4.2 |
| 100 | 155 | 116.25 |

#### Current APRs

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| 80 | 3.99 | 2.71 |
| 100 | 54 | 45.9 |

### Moonriver On-chain Liquidity

In shaping our recommendations via our risk models, we consistently monitor market liquidity and concentration risks pertaining to the Moonriver protocol. We aim to provide the community with pivotal liquidity metrics for Moonriver assets. The liquidity on Moonriver has not shown improvement since our last reccomendation cycle, however we believe xcKSM and WMOVR caps are in-tune with the on-chain liquidity available and further risk-on measures are not warrented. We recommend to continue monitoring the Moonriver market and ecosystem.

**Current Liquidity for Rec**

| Asset | 10% Liquidity Depth (#) | 10% Liquidity Depth ($) | 25% Liquidity Depth | 25% Liquidity Depth ($) |
| --- | --- | --- | --- | --- |
| WMOVR | 820 | $16,669 | 2500 | $42,524 |
| xcKSM | 215 | $9,442 | 640 | $23,403 |
| FRAX | 25000 | $25,000 | 75000 | $75,000 |

**Previous Liquidity for Rec**

| Asset | 10% Liquidity Depth (#) | 10% Liquidity Depth ($) | 25% Liquidity Depth | 25% Liquidity Depth ($) |
| --- | --- | --- | --- | --- |
| WMOVR | 1800 | $37,796 | 5600 | $97,108 |
| xcKSM | 500 | $22,166 | 1500 | $55,423 |
| FRAX | 25000 | $25,000 | 75000 | $75,000 |

**Current Rec Cycle Metrics**

| Asset | Circulating Supply | Supply Balance | Supply Balance / Circulating Supply | Borrow Cap | Borrow Cap / Circulating Supply |
| --- | --- | --- | --- | --- | --- |
| WMOVR | 90,817 | 153,101 | 168% | 40,000 | 44.44% |
| xcKSM | 44,086 | 32,427 | 73.55% | 14,000 | 31.76% |
| FRAX | 5,450,958 | 284,169 | 5.21% | 270,000 | 4.95% |

**Previous Rec Cycle Metrics**

| Asset | Circulating Supply | Supply Balance | Supply Balance / Circulating Supply | Borrow Cap | Borrow Cap / Circulating Supply |
| --- | --- | --- | --- | --- | --- |
| WMOVR | 199,689 | 156,011 | 78.12% | 40,000 | 38.47% |
| xcKSM | 69,909 | 39,038 | 55.84% | 14,000 | 16.17% |
| FRAX | 5,450,958 | 538,778 | 9.88% | 500,000 | 9.17% |

The circulating supply on the Moonriver market appears to be well-balanced in relation to borrowing caps. Hence, Gauntlet doesn’t recommend any cap changes for the above assets.

### 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.

### Risk Dashboard

The community should use Gauntlet’s [Moonriver Risk Dashboard](https://risk.gauntlet.network/protocols/moonwell/markets/apollo) to understand better the updated parameter suggestions and general market risk.

VaR (Value at Risk) is defined as the expected insolvent amount (defined as excess debt relative to collaterals for any account) in a given day for a protocol under extremely adverse market conditions. We use our models to pre-configure specific risky market scenarios and stress test protocols via simulations leveraging current user positions, asset prices, and varied liquidity conditions. VaR is an estimate of the expected insolvencies for a single day given a severe correlated market downturn.

LaR is calculated as the expected liquidation amount under extremely adverse market conditions. It represents our estimation on what would happen if the market crashes, etc..

### Quick Links

_Please click below to learn about our methodologies:_

[Gauntlet Parameter Recommendation Methodology](https://medium.com/gauntlet-networks/gauntlets-parameter-recommendation-methodology-8591478a0c1c)  
[Gauntlet Model Methodology](https://medium.com/gauntlet-networks/gauntlets-model-methodology-ea150ff0bafd)

_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._

---

<div class="post-metadata">

**Author:** ![Gauntlet](https://dub1.discourse-cdn.com/flex017/user_avatar/forum.moonwell.fi/gauntlet/32/780_2.png) [@Gauntlet](https://forum.moonwell.fi/u/Gauntlet)\
**Post date:** [March 27, 2024, 12:56am UTC](https://forum.moonwell.fi/t/gauntlet-s-base-moonbeam-moonriver-recommendations-2024-03-26/841/2 "2024-03-27T00:56:39Z")

</div>

[WETH](https://basescan.org/tx/0x16e2020971d1bf08eccc7de5d3776535926e31fca45c51f8c0ecdd4e492916b1#eventlog) and wstETH [Supply](https://basescan.org/tx/0x561cd8cf980446e77b60c3ae65d3ad178777d130ec0b8b68c165b97f83a6f337#eventlog) and [Borrow](https://basescan.org/tx/0xbd2183740c8b3f8baa4b46f3267962313d525b21bfd29d5efb2556374b32857b#eventlog) Cap changes executed on-chain.