[Gauntlet] - Sonic Recommendations
Simple Summary
Given the recent rise in DEX liquidity on Sonic, Gauntlet would like to share updated recommendations for the assets in the following comets:
Risk Parameters
USDC.e Comet
| Asset | Collateral Factor | Liquidation Factor | Liquidation Penalty | Supply Cap |
|---|---|---|---|---|
| SONIC | 70% | 75% | 20% | 20M SONIC |
| stS | 65% | 70% | 25% | 20M stS |
USDT Comet
| Asset | Collateral Factor | Liquidation Factor | Liquidation Penalty | Supply Cap |
|---|---|---|---|---|
| SONIC | 70% | 75% | 20% | 3.8M SONIC |
| stS | 65% | 70% | 25% | 3.7M stS |
SONIC Comet
| Asset | Collateral Factor | Liquidation Factor | Liquidation Penalty | Supply Cap |
|---|---|---|---|---|
| stS | 80% | 85% | 10% | 31M stS |
Rationale
S/USDC.e DEX Slippage
stS/USDC.e DEX Slippage
S/USDT DEX Slippage
stS/USDT DEX Slippage
stS/S DEX Slippage
The recent incentive program on Sonic has had trickle down effects on the DEX TVL providing deeper liquidity for the above collateral-borrow pairs. We recommend setting the supply caps to the levels suggested above. Given the improved liquidity against USDT pairs, we also recommend listing the USDT comet with CF, LF and LP parameters matching that of USDC.e comet.
IR curves
We recommend aligning the IR curves for USDT and USDC.e comet to that proposed in the most recent IR curve recommendations.
USDT Comet
Targetted Reserves: 20M
Storefront price factor: 60%
Seed Reserves: 50k USDT
Our COMP rewards recommendations are designed to offer appealing distribution APRs when the comets are first launched and when supply caps are highly utilized.
Gauntlet is recommending supply rewards to incentivize a more significant inflow of supply tokens into the protocol. This is important in the early stages of protocol growth before borrowers can join. Daily COMP rewards are subject to change as TVL rises and the markets evolve.
| Daily COMP Supply Rewards | Daily COMP Borrow Rewards |
|---|---|
| 3 | 2 |
With the above utilization and the present Interest Rate curve, for USDT comets:
- Supply APR: 4.25%
- Borrow APR: 5.25%
Given the current COMP price of $41 at 90% utilization:
- Supply Distribution APR: 2.8%
- Borrow Distribution APR: 2.06%
This results in the following Net APRs:
- Net Supply APR: 7.04%
- Net Borrow APR: 3.19%