Gauntlet’s BASE/Moonbeam/Moonriver Recommendations (2024-06-26)

Base Recommendations

Simple Summary

Risk Parameters

A proposal to adjust 6 risk parameters:

Risk Parameter Current Value Recommended Value
USDC Supply Cap 92,000,000 100,000,000
USDC Borrow Cap 84,000,000 92,000,000
cbETH Supply Cap 7,200 8,000
cbETH Borrow Cap 2,520 3,200
AERO Supply Cap 16,000,000 No Change
AERO Borrow Cap 10,000,000 No Change

*Cap Recommendations will be implemented via Guardian

IR Parameters

A proposal to adjust WETH, wstETH, cbETH, rETH and AERO’s IR curve:

WETH IR Parameters Current Recommended
Base 0 0
Kink 0.8 0.8
Multiplier 0.02 0.01
Jump Multiplier 4.2 4.2
wstETH IR Parameters Current Recommended
Base 0 0
Kink 0.35 0.35
Multiplier 0.075 0.061
Jump Multiplier 3.5 3.5
cbETH IR Parameters Current Recommended
Base 0 0
Kink 0.35 0.35
Multiplier 0.075 0.061
Jump Multiplier 3.5 3.5
rETH IR Parameters Current Recommended
Base 0 0
Kink 0.35 0.35
Multiplier 0.075 0.061
Jump Multiplier 3.5 3.5
AERO IR Parameters Current Recommended
Base 0 0
Kink 0.45 0.45
Multiplier 0.145 0.18
Jump Multiplier 3.15 3.96


Risk Parameters

Gauntlet recommends increasing supply and borrow caps for USDC and cbETH, while recommend no change in caps for AERO. Gauntlet also recommends making changes to borrow rates of WETH, LSTs (wstETH, cbETH, rETH) and AERO to reflect market rates.

Cap Recommendations

Gauntlet suggests implementing adjustments to supply and borrow caps across USDC, cbETH and DAI to optimize protocol performance and mitigate risks. This includes:

  • USDC - In accordance with Gauntlet’s methodology for managing parameters, we propose scaling up the supply caps (92M → 100M) and borrow caps(84M → 92M) for USDC. Of the top 10, four positions are borrowing non-recursively, with two positions borrowing AERO. The rest of the positions are borrowing recursively.

  • cbETH - We propose scaling up both supply caps (7,200 → 8,000) and borrow caps for cbETH (2,520 → 3,200). Of the top 10 positions, most users are borrowing recursively or correlated assets, with two postions only supplying collateral. The rest of the positions are supplying a blended collateral of either USDC or WETH against WETH or USDC borrows. Gauntlet will continue to monitor these positions. This adjustment aims to optimize the system by aligning borrow caps with the reduction of the kink (45% → 35%). At maximum utilization, the borrow cap should be a little over 35% of the maximum supply cap, while the introduction of a high slope 2 in this context leads to higher Annual Percentage Rates (APRs), which helps to ensure that utilization remains at the 35% uOptimal threshold. Additionally, previous increases in Reserve Factors contribute to maintaining a balanced approach between capital efficiency and risk management.

The above adjustment also takes into account the increasing on-chain liquidity for cbETH as show by the 25% DEX Slippage below.

  • AERO - Based on the analysis done in the previous Cap updates, Gauntlet recommends making no changes to the AERO caps despite supply and borrow caps crossing the 90% threshold. We alternatively recommend increasing borrow APRs at kink to bring utilization closer to kink. This is due to the increasing AERO emissions and it’s effect on on-chain liquidity, with hightened volatility at the backdrop.

BASE Circulating Tokens and Supply Cap

Asset Borrow Cap Supply Cap Borrow Cap Usage Supply Cap Usage DEX 25pct Slippage Token DEX 25pct Slippage USD
AERO 10,000,000 16,000,000 92.31% 89.59% 4,814,363 $3,588,172.52
rETH 350 1,000 50.31% 97.40% 841 $3,191,765.81
wstETH 2,400 6,300 20.85% 60.49% 856 $3,423,863.85
cbETH 2,520 7,200 38.03% 74.22% 945 $3,465,701.75
USDbC 200,000 250,000 66.19% 74.86% 5,771,097 $5,770,898.03
WETH 40,000 60,000 52.41% 57.29% 1,021 $3,487,985.67
DAI 1,500,000 2,000,000 56.19% 60.63% 292,877 $292,815.18
USDC 84,000,000 92,000,000 71.97% 72.90% 3,585,887 $3,585,763.25

IR Parameters

Based on our ongoing monitoring of asset utilization and market dynamics, we propose revising the borrow rates at kink thresholds for WETH, LSTs, and AERO to better reflect current market conditions and borrower demand.

WETH IR Parameters

Despite previous reductions in borrow APRs, utilization for WETH has consistently remained below the current kink threshold of 80%. To better reflect prevailing market conditions, we advocate for a further decrease in Borrow APRs. Specifically, we propose reducing slope1, which will lower APRs from 1.6% to 0.8%, representing an 80 basis point reduction. This adjustment aims to enhance capital efficiency and encourage greater borrowing activity.

Gauntlet continues to monitor market borrow rates and utilization on Moonwell closely, allowing for ongoing adjustments to IR parameters as necessary.

Recommended WETH IR Curve

Projected APRs for WETH

Utilization Borrow APR Supply APR
0 0 0
kink 0.8 0.48
100 84.8 63.6

Current APRs for WETH

Utilization Borrow APR Supply APR
0 0 0
kink 1.6 0.96
100 85.6 64.2

LST IR Parameters

LST utilization has persistently declined, dropping below the kink threshold. To accurately gauge market dynamics, we propose a reduction in borrow APRs to ascertain true market rates. While previous kink reductions have supported interest rates amid low utilization, further reducing borrow rates is deemed beneficial for strengthening LST markets. Gauntlet suggests lowering borrow rates to 2.13% from the current 2.62% to achieve this.

Recommended LST IR Curve

Screenshot 2024-06-24 at 6.01.43 PM

Projected APRs for LSTs (wstETH, cbETH, rETH)

Utilization Borrow APR Supply APR
0 0 0
kink 2.135 0.56
100 229.6 172.22

Current APRs for LSTs (wstETH, cbETH, rETH)

Utilization Borrow APR Supply APR
0 0 0
kink 2.625 0.64
100 230.12 161

AERO IR Parameters

Despite previous increases in borrow rates, AERO utilization continues to exceed the kink threshold, indicating significant demand for borrowing AERO. To rebalance this market and align utilization with healthier levels, Gauntlet recommends raising the borrow APR to 8.1%.

Recommended AERO IR Curve

Projected APRs for AERO

Utilization Borrow APR Supply APR
0 0 0
kink 8.1 2.73
100 225.9 169.42

Current APRs for AERO

Utilization Borrow APR Supply APR
0 0 0
kink 6.5 2.2
100 176.4 132.3

Gauntlet will monitor the utilization of WETH, LSTs and AERO and consider additional actions if necessary.

Moonbeam Recommendations

Simple Summary

A proposal to adjust 2 total risk parameters:

Parameter Current Value Recommended Value
xcDOT Borrow Cap 425,000 150,000
FRAX Borrow Cap 2,000,000 500,000

A proposal to make an IR curve adjustments for WBTC.wh:

WBTC.wh IR Parameters Current Recommended
BASE 0.02 0.02
Kink 0.6 0.45
Multiplier 0.15 0.187
Jump Multiplier 3 3


Risk Parameters

The Liquidity on Stellaswap, Moonbeam’s leading DEX is down 25% compared to start of the month. Gauntlet recommends reducing borrow caps for xcDOT based on prevailing liquidity conditions and reducing FRAX borrow caps due to underutilization. We also recommend reducing kink for WBTC.wh considering 99% borrow cap utilization.

Borrow Caps

xcDOT: The current borrowed amounts for xcDOT are less than 20% of the borrow caps. Gauntlet recommends reducing caps (425,000 → 150,000) to tackle under-utilization. Five out of the top 10 are only supplying collateral, the rest are borrowing blended correlated assets or stablecoins.

FRAX: Similarly, the borrows for FRAX make up to only 3% of the total borrow caps. The current on-chain liquidity for FRAX is around the $72k range which is 83% of the borrowed amounts. Although there are more avenues to move FRAX such as the FRAX ferry/FRAX swap, we recommend reducing the borrow cap (2.5M → 500K) to gradually align the risk with respect to on-chain liquidity.

IR Parameters

The utilization of the Borrow Cap for WBTC.wh is currently at 99%, suggesting that borrowed amounts are almost fully utilized despite existing liquidity conditions, potentially influenced by looping strategies. To mitigate risks, we recommend reducing the kink from 60% to 45%. Additionally, we propose increasing slope1 to change borrow APRs from 11% to 10.4%. This adjustment aims to manage the high utilization effectively. Any utilization beyond the kink level should trigger higher borrow APRs, encouraging users to return to the kink.

WBTC.wh DEX Liquidity

IR Curve for WBTC.wh

Screenshot 2024-06-25 at 10.39.29 AM

Recommended Borrow and Supply APR for WBTC.wh

Utilization Borrow APR Supply APR
0 2 2
kink 10.41 3.04
100 175.45 114

Current Borrow & Supply APR for WBTC.wh

Utilization Borrow APR Supply APR
0 2 2
kink 11 4.28
100 131 85.14

Moonriver Recommendations

Simple Summary

Gauntlet suggests reducing borrow caps across all assets:

Parameter Current Value Recommended Value
MOVR Borrow Cap 20,000 17,000
FRAX Borrow Cap 270,000 200,000
xcKSM Borrow Cap 14,000 10,000


Gauntlet suggests modifying Borrow caps across all Moonriver assets to align with prevailing liquidity conditions:

MOVR: Gauntlet advises reducing Borrow caps from 20,000 to 17,000. Currently, $156k is borrowed against a total liquidity of $515k. The liquidity trend has been declining year-to-date.

FRAX: Similarly, for FRAX, Gauntlet recommends lowering borrow caps from 280,000 to 200,000. Presently, $114k is borrowed with total liquidity amounting to $112k. Liquidity in the FRAX pool has been persistently decreasing as well.

xcKSM: Gauntlet also suggests reducing xcKSM’s borrow cap from 14,000 to 12,000. Borrowed amounts total $177k against Solarbeam’s backdrop of declining liquidity ($127k).

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.

Quick Links

Please click below to learn about our methodologies:

Gauntlet Parameter Recommendation MethodologyGauntlet Model Methodology

By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at


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.


I am definitely for increasing the caps for stable coin and ETH realted currencies on base. This will only give the platform a stronger foundation to grow from. I also like keeping the AERO supply and borrow caps the same with how the AERO charts look right now. The only thing i slightly question is lowering the xcDOT borrow caps. I just generally don’t like decreasing exposure to stablecoins when it comes to borrow/lending platform. But also, based on the liquidity information given in the recommendation, I do see the point of decreasing exposure in ther short-term.