Gauntlet's BASE Recommendations (2023-10-05)

Simple Summary

Risk Parameters

A proposal to adjust 2 risk parameters:

Risk Parameter Current Value Recommended Value
USDC Collateral Factor 80% 82%
WETH Collateral Factor 78% 80%

IR Parameters

A proposal to adjust IR parameters across 5 assets:

Gauntlet recommends reducing the Multiplier to 0.037 in order to lower the APY at the kink point to 3.96%. This adjustment is proposed to enhance the capital efficiency of the WETH liquidity pool.

WETH IR Parameters Current Recommended
BASE 0.01 0.01
Kink 0.8 0.8
Multiplier 0.04 0.037
Jump Multiplier 4.8 4.8

Per @Warden’s recommendation here, Gauntlet supports the Jump Multiplier increase to 8.6 for all stablecoins and cbETH IR parameter changes.

DAI/USDC/USDbC IR Parameters Current Recommended
BASE 0 0
Kink 0.8 0.8
Multiplier 0.045 0.045
Jump Multiplier 2.5 8.6
cbETH IR Parameters Current Recommended
Base 0.01 0
Kink 0.45 0.45
Multiplier 0.2 0.07
Jump Multiplier 3 3.15


Risk Parameters

Our recommendations have an estimated VaR at $0 and remains unchanged. LaR increased to $904k from $871k with our current recommendations. Based on simulation results, Gauntlet recommends increasing the collateral factors for WETH and USDC in order to improve capital efficiency with minimal impact to risk.

BASE Liquidity

Assets 10% Slippage 10% Slippage ($) 25% Slippage 25% Slippage ($) Circulating Supply
WETH 1,500 $2,467,755 3,600 $5,922,612 42,089
USDbC 2,500,000 $2,500,000 4,500,000 $4,500,000 98,555,993
DAI 1,700,000 $1,700,000 3,000,000 $3,000,000 15,579,027
cbETH 400 $690,292 1,200 $2,070,876 22,486
USDC 2,200,000 $2,200,000 2,600,000 $2,600,000 158,044,892

BASE Circulating Tokens and Supply Cap

Assets Circulating Supply Supply Cap Supply Cap ($) Supply Cap / Circulating Supply
WETH 42,089 10,500 $17,274,285 24.95%
USDbC 98,555,993 10,000,000 $10,000,000 10.15%
DAI 15,579,027 10,000,000 $10,000,000 64.19%
cbETH 22,486 4,000 $6,902,920 17.79%
USDC 158,044,892 10,000,000 $10,000,000 6.33%

IR Recommendations


Stablecoin IR curves would reflect the below changes:

The proposed adjustment to the Jump Multiplier is expected to increase the APR rate from 54% to 175% when the utilization is at 100%. This change should have no impact to current stablecoin positions based on current utilization. Should the utilization exceed the kink (set at 80%), the increased Jump Multiplier aims to provide stronger incentives for both suppliers and borrowers to bring the utilization back to the kink.


cbETH IR Curve would reflect the below changes:

Utilization Borrow APR Supply APR
0.00% 0.00% 0.00%
45.00% 3.15% 1.06%
100.00% 176.40% 132.30%

By setting the Borrow APR at 3.15% precisely at the kink point, we aim to incentivize and encourage greater utilization of cbETH borrowing. Presently, cbETH exhibits a 10% usage of its borrow cap and a 5% utilization rate, highlighting substantial room for increased borrowing activity.

Source: Defillama


WETH IR Curve would reflect the below changes:

Utilization Current Borrow APR Recommended Borrow APR
0% 1 1
80% 4.2 3.96
100% 100 100

cbETH Yield APY has observed a recent decline in performance. To ensure that our APRs remain competitive in comparison to the cbETH APY, we propose reducing the Multiplier rate for WETH. This adjustment is anticipated to lower the Borrow APR by approximately 25 basis points, with the objective of encouraging users to persist in utilizing the recursive yield strategy.

cbETH Yield - Timeseries

cbETH 3.32% 3.46%

WETH Utilization and Borrow Balance

In recent weeks, there has been a noticeable decline in WETH utilization, primarily driven by users closing their WETH debt positions. The decision to reduce the Multiplier is driven by the intent to address this trend and, ideally, incentivize users to engage in further borrowing of WETH.

WETH Borrow Positions by User Strategy

Recursive yield strategy represents 21.22% of WETH borrowers.


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

The below figures show trends on key market statistics regarding borrows and utilization that we will continue to monitor:

Top 10 Borrowers’ Aggregate Positions & Borrow Usages

The highest borrow usage position 8f208812 is a recursive position with USDC and DAI.

Top 10 Borrowers’ Entire Supply

Link to Chart

Top 10 Borrowers’ Entire Borrows

Link to Chart

Utilization Rate of Assets - Timeseries

Link to Chart.

Borrow Cap Utilization

Supply Cap Utilization

Balances by User Strategies

LST Yield Farming sits at 10.66% for all outstanding debt positions.

Circulating Token USDC vs USDbC Supply

Gauntlet continues to monitor liquidity and circulating supply for native USDC and USDbC. Last week, there was a large fluctation in circulating supply of native USDC on BASE chain, but it has returned to 160M+.

Collateral Usage and Collateralization Ratios

WETH and USDC have the highest collateral usage.

Top 10 entire account supply & borrow positions ordered by USDC supply

Top 4 suppliers of USDC are recursive positions.

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 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

1 Like

Gauntlet would like to notify the community that BASE risk recommendation proposal will be posted on-chain early next week.

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We have reviewed Gauntlet’s recommendations for Base markets and are in favor of applying the suggested changes.

  • Suggested IR parameters are indeed exactly in line with our past recommendations.
  • Suggested Collateral factors for USDC and WETH provide sufficient buffer to protect the protocol against bad debt given a worst case asset price and liquidity drawdown scenario.

We don’t recommend further changes at the moment, as borrow and supply caps utilization is well within reasonable margin for all markets. USDbC DEX liquidity levels have been stable since caps were updated by Gauntlet on October 3rd.


DEX liquidity levels for all assets remain strong across the board. USDbC is still slightly more liquid than native USDC. We expect liquidity to shift towards the native token over time.

USDC Slippage

USDbC Slippage

WETH Slippage

cbETH Slippage

DAI Slippage

Next steps

  • Monitor USDbC and native USDC liquidity levels. Borrow and supply caps might need to be updated if signicant liquidity shift occurs.
  • Run preliminary collateral onboarding analysis for up and coming assets on Base (stETH, COMP, BAL, RPL, rETH, …)

Hey Moonwell Community,
MIP-B06 risk recommendation proposal has been submitted on-chain.