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.