Chaos Labs Recommendations - Increase XVS Minting Cap 04/07/24

Summary:

Increase XVS bridge mint cap to 1.25M.

Motivation:

Over the past few weeks, there has been a notable surge in XVS bridging activity, primarily driven by the bridging of 167K treasury XVS tokens outlined in VIP-272, “Bootstrap XVS liquidity for the Ethereum rewards,” alongside the introduction of the XVS vault. This increased activity has resulted in a reduction of the effective cap for non-treasury XVS to 333K, given the current minting cap of 500K XVS, and a total minted value of 446K XVS.

Considering the plan to distribute 22,500 XVS quarterly to the XVS vault as part of the liquidity strategy, and assuming that vault yields align with those of the BNB Vault (8.39% APR), the “Total Staked” value is projected to reach 1.1M XVS.

BNB Chain

Screenshot 2024-04-07 at 12.15.47

Ethereum

Screenshot 2024-04-07 at 12.16.54

Given that XVS will not be listed as a market on the Ethereum deployment, we recommend increasing the minting cap to 1.25M XVS to facilitate efficient yield convergence, alongside a sufficient buffer to account for treasury bridging operations. This will simultaneously discourage a disproportionately large portion of the total supply from moving away from BNB-centric liquidity for liquidations. This is especially crucial considering the limited proposed liquidity and incentives directed towards Ethereum-centric DEX liquidity, particularly in the event of a swift market downturn.

Specification:

Parameter Current Value (XVS) Recommended Value (XVS)
Mint Limit 500,000 1,250,000
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Awesome news.i agree 100 per

Let’s proceed! A must be.

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