Following up on the launch of native Base USDC on September 5th, we propose onboarding USDC as a collateral asset on Moonwell’s Base deployment.
Due to the market demand and rapid increase in USDC liquidity on Base, we think it appropriate to list the asset as collateral.
We propose launching USDC as collateral with the following parameters:
|Asset||CF||Supply cap||Borrow cap||IRM||Oracle||Protocol seize share|
|USDC||0.8||6M||5M||Stable||Chainlink USDC / USD||30%|
|Utilization||Borrow rate||Supply rate|
|Base utilization (0%)||0%||0%|
|Kink utilization (80%)||4%||2.4%|
|Max utilization (100%)||56%||40.5%|
KPIs for native USDC on Base, with DAI and USDbC as comparison (as of Sept 6 2023).
|Asset||Total supply (Base)||Circulating supply (Base)||Circulating supply (all chains)||Bridge||-5% liquidity depth (to ETH)|
DEX liquidity for USDC is currently highly concentrated in Curve 4pool. The pool currently holds over 90% of USDC DEX liquidity on Base. Furthermore, top 10 LPs on Curve 4pool hold ~60% of the liquidity.
Given these observations, we propose initializing the USDC market with conservative supply and borrow caps as a preventive measure. Caps may be adjusted shortly after launching the market once more pools are bootstrapped with substantial liquidity. Note that the Cap Guardian role allows adjusting the caps without being subject to standard 3-day voting period + timelock.
Here are the proposed caps for USDC, along with current caps for other stable markets as a matter of comparison.
|Market||Supply cap||Borrow cap|
We also strongly recommend collateral factors to be set at 0 during deployment to mitigate the risk of someone exploiting a known Compound v2 issue (see Hundred Finance exploit).
Steps for safe deployment as proposed by Hexagate are the following:
- Initialize markets using 0 as collateral factor (no borrowing possible).
- Burn a small amount of collateral token supply for each market.
- Set collateral factors for each market as specified