After seeing community member Warden propose to list DAI as an asset, Gauntlet has conducted a market risk analysis for this initial asset listing
Risk Parameter Recommendations
| Parameters | Gauntlet Rec | Warden Rec |
|---|---|---|
| CF | 0.8 | 0.8 |
| Supply Cap | 6,000,000 | 5,000,000 |
| Borrow Cap | 5,000,000 | 4,000,000 |
| Protocol Seize Share | 0.3 | 0.3 |
DAI (Stablecoin) IR Recommendations
| Stable IR Parameters | Gauntlet Rec | Warden Rec |
|---|---|---|
| Base rate | 0 | 0 |
| Multiplier | 0.05 | 0.05 |
| Kink | 0.8 | 0.8 |
| Jump Multiplier | 2.5 | 4.775 |
| Reserve factor | 0.15 | 0.15 |
Increasing the Jump Multiplier will minimize high risk utilization to the liquidity pool which can hinder liquidations and create a poor UX for suppliers, as it can restrict their ability to withdraw an asset from the pool.
However, such an increase might adversely impact stablecoin borrowers, as stablecoin liquidity pools often borrow close to the kink. A steeper gradient would thus intensify the interest paid by borrowers should utilization surpass the kink. For instance, with 82% utilization, the proposed curve would generate a Borrower APR of 14.55%, in contrast to the 10% in the existing curve.
Since USDbC has not experienced any significant utilization above the 80% kink, we do not recommend increasing the max interest rate for utilization post kink.
USDbC and DAI IR Curves
Specifications
Token Liquidity and Market Stats
| DAI | |
|---|---|
| Market Cap | $3,898,885,022 |
| Circulating Supply | 3,902,769,405 |
| 2% Depth (DEX/CEX) | $111,641,646 |
DAI has large market caps and strong tokenomics across global chains.
Supply and Borrow Caps
Borrow and supply caps are the primary parameter recommendations we can make to mitigate protocol risk when listing new assets. Gauntlet recommends setting the borrow and supply caps strategically to allow for market growth while minimizing risk to the protocol.
| Asset | Cap Recommendation |
|---|---|
| Supply Cap | 6,000,000 ($6M) |
| Borrow Cap | 5,000,000 ($5M) |
IR Curves
Stable IR Curves (DAI)
Notes
- If the community opts to initiate a lending pool with collateral factors greater than 0, Gauntlet strongly advises the protocol to establish reserves within the pools as a precautionary measure against a Hundred Finance attack.