Warden Finance - Base Liquidity Incentives

Rebalancing of Base Liquidity Incentives (2024-02-23)

Key observations

  • DAI circulating supply on Base critically low vs. total market supply. In order to mitigate risks of accumulating bad debt when liquidating large collateral positions, we generally recommend lending market supply to be capped to a maximum of 50% of on-chain circulating supply. In the case of DAI, total supply on Moonwell’s market is currently standing at 110% of circulating supply.
  • rETH circulating supply does not allow for more growth to be sustained at the moment. Total supply for rETH lending market is currently standing at 55% of circulating supply on Base.
  • Utilization for USDC, DAI, WETH and wstETH is currently at optimal levels (equal or slightly below kink). rETH and cbETH are currently underutilized.

Applied changes

  • Major decrease in rewards for DAI market to help reduce supply and borrow activity on the market.
  • Shift of cbETH rewards towards WETH and USDC to promote growth of markets that generally have stronger borrowing demand elasticity to rates.


Reward distribution (% of allocation) cbETH DAI USDbC USDC ETH wstETH rETH
WELL supply 20%→15% 10%→5% 0% 20%→25% 40%→45% 8% 2%
WELL borrow 0% 0% 0% 0% 0% 0% 0%
USDC supply 20%→15% 10%→5% 0% 20%→25% 40%→45% 8% 2%
USDC borrow 0% 0% 0% 0% 0% 0% 0%

Other notes

  • USDC rewards will be terminated at the end of current epoch. USDC rewards allocation is set to be fully disbursed by Mar 22 2024.
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