Rebalancing of Base Liquidity Incentives (2024-05-17)
Updates
- New rewards pool of 75,000 USDC is allocated towards Native USDC market rewards over epoch #11.
Key observations
Lending markets
- AERO market launched
- DAI and rETH on-chain liquidity is healthy, but does not allow for more growth to be supported.
- AERO market utilization is beyond optimal levels. Interest rate model would need to be updated in order to reduce utilization closer to kink.
Safety Module
- Total deposits: 200M WELL (above target of 30M WELL)
- Current yield: 13.8% APY (below estimated 20% APY)
We are observing difference in staking yield for Moonbeam (~20%) vs Base (~14% APY), which could be explained by difference in how users are pricing insolvency risk premia on Base vs Moonbeam deployment.
Base deployment current has a $1.86M fund to cover against bad debt, which is a healthy insurance fund relative to Moonwell TVL on Base (~$77M). In-depth documentation about the safety module is available in Moonwell docs.
Applied changes
- Rewards for LST markets have been slightly shifted towards mETH. As we generally observe much superior rate elasticity of demand for lending and borrowing ETH than LSTs, we estimate that this change will much likely yield net positive impact for the protocol.
Specifications
| Epoch # | Total per epoch | Start timestamp | Start date |
|---|---|---|---|
| 11 | 20,634,615.38 WELL 75,000 USDC |
1715983200 | Fri, 17 May 2024 22:00:00 GMT |
Liquidity incentives
89.5% of WELL (18,466,345.66 WELL) and 100% of USDC epoch rewards (75,000 USDC) allocated towards liquidity incentives.
| Reward distribution (% of allocation) | cbETH | DAI | USDbC | USDC | ETH | wstETH | rETH | AERO |
|---|---|---|---|---|---|---|---|---|
| WELL supply | 15%→10% | 1% | 0% | 16% | 47%→60% | 8%→6% | 3%→2% | 0%→5% |
| WELL borrow | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| USDC supply | 0% | 0% | 0% | 100% | 0% | 0% | 0% | 0% |
| USDC borrow | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
Safety module incentives
10.5% (2,168,269.72) of WELL epoch rewards allocated towards safety module. Reward allocation remains exactly equal to previous epochs,