Summary
Gauntlet recommends the following adjustments to the USDbC Comet incentives:
- Decrease Daily COMP Supply Rewards from 9 to 0.
- Decrease Daily COMP Borrow Rewards from 4 to 0.
Analysis
The USDC incentive program in the BASE ecosystem has significantly increased on-chain USDC liquidity, with the circulating supply now 35 times larger than USDbC. For detailed insights, refer to Gauntlet’s BASE analytics dashboard.
At the same time, USDbC has been experiencing a decline in the circulating supply of tokens, which now stands at 70M.
USDbC has experienced a stark decline in TVL within the Comet. This is being driven by the USDC incentives within the BASE ecosystem targeting USDC holders and the continuing decline in circulating USDbC and TVL within major BASE protocols, as shown above.
In relation to incentive cost per USDbC balances, we have seen incentive costs double compared to historical performance. Based on Coinbase’s continued plan to incentivize migration and growth of native USDC and the continued decline of USDbC, Gauntlet recommends removing further incentives from the USDbC Comet.
Top Borrowers on USDbC Comet
The largest borrower has an outstanding position of 770k. Based on liquidity conditions for USDbC, we do not recommend any risk-off measures at this time but Gauntlet will continue to monitor USDbC and make recommendations when necessary.
Next Step
- Target on-chain vote 05/13/24.