Summary
Chaos Labs has completed a comprehensive analysis to provide informed recommendations for the launch parameters for the Venus deployment on Ethereum. These initial recommendations are aimed at ensuring a safe and efficient launch and are the basis for future optimization post-launch and after observing usage on each pool.
Core Pool
Collateral Factor
- For Stablecoins, WBTC and WETH, we recommend starting with CF and LT parameters in line with those on the BNB pool and other protocols.
Supply and Borrow Caps
- Initial supply caps are set at ~$50M per asset. These are relatively conservative caps compared to available on-chain liquidity and will be increased post-launch after observing initial usage
IR Curves
- Recommendations are derived from observed historical rates and IR setting on other deployments.
- Targeting a 6% Borrow rate for stables at the optimal utilization point (kink).
Additional Parameters
- Close Factor - 50%
- Liquidation Incentive - 10%
- minLiquidatableCollateral 100 USD
| Asset | WBTC | WETH | USDC | USDT | crvUSD |
|---|---|---|---|---|---|
| Collateral Factor | 75% | 75% | 78% | 78% | 78% |
| Liquidation Threshold | 80% | 80% | 80% | 80% | 80% |
| Supply Cap | 1,000 | 20,000 | 50,000,000 | 50,000,000 | 50,000,000 |
| Borrow Cap | 850 | 18,000 | 45,000,000 | 45,000,000 | 45,000,000 |
| Kink | 75% | 80% | 80% | 80% | 80% |
| Base | 0% | 0% | 0% | 0% | 0% |
| Multiplier | 9% | 9% | 7.5% | 7.5% | 7.5% |
| Jump Multiplier | 75% | 75% | 80% | 80% | 80% |
| Reserve Factor | 20% | 20% | 10% | 10% | 10% |
CRV/CRVUSD Isolated Pool
Collateral Factor and Liquidation Threshold
- We recommend setting a symmetric CF and LT setting for CRV and crvUSD, allowing similar leverage for borrowing CRV against crvUSD and vice-versa.
- In this isolated pool, the borrow cap of crvUSD serves as a debt ceiling limiting the debt that can be borrowed against the CRV collateral, allowing for more aggressive CF setting than in the core pool.
Supply and Borrow Caps
- We recommend setting the initial borrow cap for crvUSD, serving as a debt ceiling at 2M with the supply cap at 2.5M. For CRV, we recommend an initial supply and borrow cap of 6M and 3M, respectively.
IR Curves
- crvUSD IR curves recommendations inline with the stablecoin recommendations on the core pool.
- CRV IR is set inline with similar assets on the BNB core pool.
Additional Parameters
- Close Factor - 50%
- Liquidation Incentive -10%
- minLiquidatableCollateral 100 USD
| Asset | crvUSD | CRV |
|---|---|---|
| Collateral Factor | 45% | 45% |
| Liquidation Threshold | 50% | 50% |
| Supply Cap | 2,500,000 | 6,000,000 |
| Borrow Cap | 2,000,000 | 3,000,000 |
| Kink | 80% | 50% |
| Base | 0% | 2% |
| Multiplier | 7.5% | 20% |
| Jump Multiplier | 80% | 300% |
| Reserve Factor | 10% | 25% |
WETH/WSTETH Isolated Pool
Collateral Factor and Liquidation Threshold
- To optimize CF and LT setting for LST/Underlying Asset borrowing, and allowing more leverage for looping, we recommend implementing a calculated price oracle, utilizing the primary exchange rate to determine the oracle price for wstETH, in correlation with the price of WETH.
- Consquently, we recommend setting parameters inline with other isolated WETH/WSTETH borrowing markets, setting the CF at 90% and LT at 93%
Supply and Borrow Caps
- We recommend setting the initial supply caps at ~$50M.
- We recommend setting the borrow cap for WETH at 90% the supply cap and the borrow cap for wstETH at 10% of the supply cap as observed utilization rate for LSDs has been very low. If there is a significant increase in demand and utilization, we will reassess the caps according to the utilization pattern.
IR Curves
- With current staking rates at around 3.5%, we recommend targeting a 2.8% borrowing rate for WETH. For WSTETH, we recommend setting the borrow cap inline with that of the large cap assets in the core pool.
Additional Parameters
- Close Factor - 50%
- Liquidation Incentive - 2%
- minLiquidatableCollateral 100 USD
| Asset | WETH | WSTETH |
|---|---|---|
| Collateral Factor | 90% | 90% |
| Liquidation Threshold | 93% | 93% |
| Supply Cap | 20,000 | 20,000 |
| Borrow Cap | 18,000 | 2,000 |
| Kink | 80% | 45% |
| Base | 0% | 0% |
| Multiplier | 3.5% | 9% |
| Jump Multiplier | 80% | 75% |
| Reserve Factor | 15% | 20% |