USDC V3 Reserves/Interest Rate Issue

Hi All,

I believe I have discovered an issue with the USDC V3 protocol and/or dashboard. Currently, it appears the protocol is paying more to earners than the borrowers interest rate would imply. Specifically, this excess interest is reducing the USDC V3 reserves, as you can see in the table below from 12/6/22 to 12/8/22. This issue did not exist in October as reserves were increasing the difference between daily borrow and daily earn was positive.


The calculation used for Daily Borrow/Earn Amount is as follows:
Daily Borrow or Earn Amount= (Total Borrow or Earn)∙((1+APR)^(1⁄365)-1)

This is an estimate as it does not have full significant figures in the calculation, but it is close enough to see what is going on and is consistent with the change in Reserves.
Additionally, I am confused why the token reserves have not increased other than the $0.14 increase in ETH. This is surprising given the volatility and likely liquidations that have occurred (although I have not investigated whether or not any liquidations occurred). Is there an issue with the dashboard in reflecting the token reserves?
Please let me know if I missed anything.


Reserves for USDC V3 continue to trend down. While it will be a long time before it hits zero, it is still going in the wrong direction. Bumping this thread for visibility.

This is an intended feature of the current interest rate model; it generates reserves when above 50% utilization, and slightly churns reserves when below 50% utilization (though in a way that should, in theory, grow the market size).

You can see the model in this thread from the launch of the market.

It should be noted that the interest rate model is only one of two systems that can increase and decrease reserves; the liquidation process also increases and decreases reserves.

In aggregate, the reserves of the market have been increasing in the aggregate since launch, though this should be continuosly monitored (and your participation here is helpful!)