Summary
A proposal to:
- Increase BAL’s supply cap on the Ethereum Core pool.
All recommended increases are backed by Chaos Labs’ risk simulations, which consider the user behavior, on-chain liquidity, and price impact, ensuring that the higher cap does not introduce additional risk to the platform.
Motivation
BAL (Ethereum Core)
BAL’s supply cap utilization has quickly reached 100% again following the previous cap increase. The deposit has been done through a single transaction from a single entity.
Supply Distribution
The user that supplied BAL following the latest cap increase, humpy.eth, is the same user that previously represented the totality of the supply in the market. While the user actively manages the position, this address still poses a concentration risk. The user currently maintains a high health score of 2.81; however, if the BAL position is increased further, a more aggressive utilization could lead to liquidation risks.
Liquidity
BAL’s liquidity has remained stable over the past three months, currently allowing a 200K BAL sell with less than 4% price slippage, supporting a supply cap increase.
Recommendation
Given the stable on-chain liquidity and active management of user positions, we recommend increasing BAL’s supply cap to 4,100,000.
Specification
| Market | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | BAL | 4,000,000 | 4,100,000 | 700,000 | - |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.