Warden Risk Recommendations - Supply/Borrow Caps on BASE

As highlighted in our forum post regarding BASE recommendations, we propose reducing the USDbC borrow and supply caps. This adjustment comes in anticipation of the native USDC listing and the upcoming migration from USDbC to USDC, as planned by Circle and the BASE foundation.

Reducing the supply cap for cbETH and ETH would result in a supply cap usage of approximately 75% with the following available liquidity:

Asset Recommended Cap Usage Remaining Liquidity
cbETH 77.75% $727,130.00
ETH 74.62% $1,977,102.00

Gauntlet would recommend maintaining higher caps based on these asset’s current on-chain liquidity, overall global liquidity (cross chain + CEX), and to maintain liquidity for potential large LPs similar to current users 0x9e67663 ($1.3M) or 0x73831e7 ($1.1M) to utilize Moonwell BASE liquidity pools.

Asset Current Cap Current Cap USD Avaiable Liquidity
cbETH 4000 $6,536,000.00 $3,995,130.00
ETH 10500 $16,359,000.00 $10,546,102.00

For the WETH borrow cap, a reduction would result in 77% cap usage, leaving a liquidity of $1.2M. We would recommend to maintain current borrow caps based previously mentioned liquidity, circulating supply, and token amount amongst top wallets:

Address WETH Tokens
0xb4885bc63399bf5518b994c1d0c153334ee579d0 13056.25493
0x44ecc644449fc3a9858d2007caa8cfaa4c561f91 7273.626551
0xba12222222228d8ba445958a75a0704d566bf2c8 2193.895608
0x6223bd82010e2fb69f329933de20897e7a4c225f 1330.577781
0x9BB646BF0F4Da44bfaF3d899e774DE065731EDFe 1305.140936
Top 5 25,159.49581

These leading wallets represent access to tokens for market makers and users, ensuring liquidity remains robust even in instances of excessive borrowing of token.

Gauntlet remains neutral on the decision to reduce the cbETH borrow cap. Following Warden’s recommendation, we will adjust the cbETH borrow cap from 1,200 to 1,000.