Our recent Polygon v3 USDC weekly update mentioned that the MaticX supply cap utilization increased from 6.70% to 99.40% on 10/10/23 due to the user with address
0x1e5b92c66e4cad7963e8dacf1e8d642304c172c8 who supplied $3.08M MaticX. The supply cap utilization is currently at 96%.
Gauntlet does not currently recommend increasing the MaticX supply cap.
The supply cap utilization for MaticX is currently 96%.
Below are details of the top MaticX suppliers:
Top 10 MaticX suppliers and percentage of total MaticX supplies:
Supply and borrow positions of the top 10 MaticX suppliers:
Top 10 MaticX suppliers and borrow usages:
On 10/10/23, the MaticX supply cap increased from 6.70% to 99.40% due to a contribution by a user with address
0x1e5b92c66e4cad7963e8dacf1e8d642304c172c8. This user supplied 5.5M MaticX tokens ($3.11M), currently accounting for 96% of the total MaticX supply on Polygon v3 USDC. They’ve also borrowed $1M USDC, leading to a 53.7% borrow usage.
The total circulating MaticX on Polygon is 82.48M tokens, with this user holding 6.67% of it.
Given the low MaticX daily trading volume (~$650k), minimal DEX liquidity ($3.36M MaticX/USDC swap incurs roughly 54% slippage), and concentration risk of a large supplier, we do not currently recommend increasing the MaticX supply cap.
This assumption takes a conservative approach and doesn’t account for MATIC liquidity, which could come into play when MaticX positions are absorbed. In such scenarios, MaticX collateral buyers might convert their MaticX to MATIC, utilizing its liquidity. If the community leans towards a higher supply cap for MaticX, we can adjust our recommendation to encompass MATIC liquidity.
When integrating MATIC liquidity into the MaticX supply cap strategy, consider the following:
- Due to low MaticX/USDC liquidity, converting MaticX to USDC can result in significant slippage for buyers.
- While the MATIC/USDC liquidity is more favorable, MaticX purchasers have two main considerations for arbitrage:
- Unstaking MaticX to revert to MATIC involves a 2-3 day waiting period, making it less appealing for immediate arbitrage.
- If the purchaser already holds MATIC, they could sell it at the prevailing higher liquidity rates and then initiate the unstaking of their new MaticX.
Increasing the MaticX supply cap comes with its challenges. The chance that liquidators may lack adequate MATIC amplifies the risk of buying MaticX in low liquidity situations.
- Create a poll to gauge community preferences