Summary
A proposal to:
- Increase solvBTC’s supply cap on the BNB Core pool.
- Increase WETH’s supply cap on the Unichain Core pool.
- Increase USDC’s supply cap on the Unichain 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.
solvBTC (BNB Core)
solvBTC’s supply cap utilization has reached 100%, while its borrow cap utilization stands at 37%.
Supply Distribution
The supply distribution of solvBTC is well-diversified, with the top supplier accounting for only about 15% of the total supply. All top solvBTC suppliers currently maintain healthy health scores above 1.3, except for one user who has borrowed solvBTC itself and holds a health score of 1.1. Given this distribution, solvBTC does not present any significant liquidation risk at this time.
BTCB is the largest borrowed asset against solvBTC, accounting for 34% of the total borrowed asset distribution. This significantly reduces the likelihood of large-scale liquidations, as BTCB is highly correlated with solvBTC.
Liquidity
solvBTC’s liquidity has remained stable over the past two months, currently allowing a 30 solvBTC sell with less than 4% price slippage, supporting a supply cap increase.
Recommendation
Given the on-chain liquidity and current user positions, we support a supply cap increase. Additionally, as we anticipate a significant influx of solvBTC deposits, we recommend raising the supply cap to 1,720.
WETH and USDC (Unichain Core)
WETH
WETH’s supply cap utilization has reached 99%, while its borrow cap utilization stands at 60%.
Supply Distribution
The supply of WETH has grown significantly since our last inspection, rising from 1,019 WETH to 3,150 WETH. Additionally, the number of holders has surged from 469 to 20,250, indicating strong demand.
The supply distribution of WETH presents minimal liquidation risk, as all WETH suppliers are borrowing WETH itself, significantly reducing the likelihood of liquidations.
USDC
USDC’s supply cap utilization has reached 99%, while its borrow cap utilization stands at 50%.
Supply Distribution
The supply of USDC has also grown significantly since our last inspection, rising from 3.3M USDC to 5.15M USDC. Additionally, the number of holders has surged from 84 to 26,847 over a short period, indicating strong demand.
The supply of USDC is well-distributed, with all top USDC suppliers borrowing USDC itself, significantly minimizing the risk of liquidations.
Liquidity
Currently, WETH liquidity allows a 10 ETH sell with less than 4.5% price slippage. Although the assets have relatively limited liquidity compared to their total supply, our analysis of user behavior suggests that this does not pose significant concerns at this time.
Recommendation
Given the recent rapid increase in WETH and USDC supply, along with strong user demand, we recommend increasing WETH’s supply cap to 1,000 and USDC’s supply cap to 1.5M.
Specification
| Market | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| BNB Core | solvBTC | 480 | 1720 | 110 | - |
| Unichain Core | WETH | 700 | 1,000 | 300 | - |
| Unichain Core | USDC | 1,000,000 | 1,500,000 | 850,000 | - |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.