[Gauntlet] - USDS Recommendations
Summary
We recommend onboarding USDS as collateral on Moonwell’s Core lending markets on Base.
USDS
Risk Parameter Recommendations
| Parameters | Values |
|---|---|
| CF | 83% |
| Supply Cap | 750,000 |
| Borrow Cap | 690,000 |
| Protocol Seize Share | 30% |
IR Recommendations
| IR Parameters | Recommended |
|---|---|
| Base | 0 |
| Kink | 0.9 |
| Multiplier | 0.067 |
| Jump Multiplier | 9 |
| Reserve Factor | 0.1 |
Supporting Data
Volatility & Max DD
The maximum and minimum daily log returns for USDS are 16.877% and -21.48% respectively over the past 180 days, this large deviation was primarly seen during USDS’s nascency. However, the annualized 30D log volatility stands at 11.82% indicating convergence of USDS to its underlying. Given this we recommend aligning USDS’s initial CF to that of USDC.
Supply and Borrow Caps
DEX TVL
| Pool Type | Pool Name | Pool TVL (USD) | 24H Volume (USD) | URL |
|---|---|---|---|---|
| Aerodrome Slipstream | USDS / USDC 0.01% | $1.71M | $99,745.24 | Link |
| Aerodrome Slipstream | USDS / WETH 0.05% | $0.00M | $2,023.41 | Link |
Total TVL: $1.71 million
The total DEX TVL of USDS on Base currently stands at $1.7M. However, the on-chain circulating supply has surged exponentially from 1M USDS to 100M USDS, representing a 100x increase. This significant growth suggests that a portion of the increased supply is likely to flow into DEX liquidity.
Given this context, Gauntlet recommends implementing a conservative initial cap to align with current market conditions. As market demand and liquidity evolve, Gauntlet will leverage the cap guardian to adjust and increase caps accordingly.
On Base, there is sufficient liquidity to trade upto 1M USDS tokens with a slippage of ~27%. We recommend setting the borrow cap at 690k USDS to adjust for kink level.
IR Parameter Specifications
USDS IR Curves
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0 | 0 |
| kink | 6.03 | 4.88 |
| 100 | 96 | 86.4 |
We recommend an IR curve with a borrow APR of 6% at kink.