Simple Summary
Gauntlet recommends the following adjustments to the protocol:
Supply Cap Recommendations
| Status | Comet | Asset | Supply Cap |
|---|---|---|---|
| Current | Mainnet USDC | deUSD | 8,000,000 |
| Proposed | Mainnet USDC | deUSD | 8,100,000 |
| Current | Mainnet USDC | sdeUSD | 5,000,000 |
| Proposed | Mainnet USDC | sdeUSD | 5,100,000 |
| Current | Mainnet USDS | deUSD | 8,000,000 |
| Proposed | Mainnet USDS | deUSD | 8,100,000 |
| Current | Mainnet USDT | deUSD | 8,000,000 |
| Proposed | Mainnet USDT | deUSD | 8,100,000 |
| Current | Mainnet USDT | sdeUSD | 5,000,000 |
| Proposed | Mainnet USDT | sdeUSD | 5,100,000 |
Rationale
deUSD
Supply cap usage has increased substantially for deUSD in recent months.
Mainnet USDC:
Mainnet USDT:
- Gauntlet observes that DEX liquidity remains consistent; when reviewing top user positions, we observe they are utilizing looping strategies to generate yield.
Mainnet USDC:
Mainnet USDT:
- We note that Elixir provides atomic mint/redeems via authorized participants (https://docs.elixir.xyz/deusd/deusd-architecture/centralized-exchange-execution), which should augment onchain liquidations.
- Gauntlet recommends a 100K deUSD cap increase for the Mainnet USDC and USDT Comets.
sdeUSD
The usage of the supply cap for sdeUSD has significantly increased in recent months.
Mainnet USDC:
Mainnet USDT:
- Noting that sdeUSD is treated as deUSD for the purpose of liquidations, Gauntlet observes less that 5 percent slippage when simulating liquidating the full supply cap.
Mainnet USDC:
Mainnet USDT:
- As previously noted, Elixir provides atomic mint/redeems via authorized participants (https://docs.elixir.xyz/deusd/deusd-architecture/centralized-exchange-execution) to augment onchain liquidations.
- Gauntlet recommends a 100K sdeUSD cap increase on the Mainnet USDC and USDT Comets.
Next Steps
- We welcome community feedback.