# Chaos Labs - Risk Parameter Updates - 03/10/25

**URL:** <https://community.venus.io/t/chaos-labs-risk-parameter-updates-03-10-25/4986>\
**Category:** Venus - Governance Proposals\
**Created:** [March 10, 2025, 9:26pm UTC](https://community.venus.io/t/chaos-labs-risk-parameter-updates-03-10-25/4986 "2025-03-10T21:26:10Z")\
**Posts on this page:** 1\
**Page:** 1

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**Author:** ![chaoslabs](https://community.venus.io/user_avatar/community.venus.io/chaoslabs/32/2278_2.png) [@chaoslabs](https://community.venus.io/u/chaoslabs)\
**Post date:** [March 10, 2025, 9:26pm UTC](https://community.venus.io/t/chaos-labs-risk-parameter-updates-03-10-25/4986/1 "2025-03-10T21:26:10Z")

</div>

# **Summary**

A proposal to:

- Increase USDC’s supply and borrow caps on the Unichain 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.

## WETH (Unichain)

WETH’s supply cap utilization has reached 100%, while its borrow cap utilization stands at 82%.

 ![Screenshot 2025-03-10 at 1.19.06 PM](https://community.venus.io/uploads/default/original/2X/0/03ce922a1655a3b1d8a1dad9e83e39d2b6398fe0.png)

 ![Screenshot 2025-03-10 at 1.19.26 PM](https://community.venus.io/uploads/default/original/2X/f/f37740f657aed45088a06216f5133b18c7c2849c.png)

### **Supply Distribution**

The supply distribution of WETH presents minimal liquidation risk, as all WETH suppliers are borrowing WETH itself, which significantly reduces the likelihood of liquidations.

 ![image (12)](https://community.venus.io/uploads/default/original/2X/2/2259671c24df66ca80acb98d8e6f68f0bddfd049.png)

The largest borrowed asset against WETH is WETH itself, accounting for 93% of the total distribution.

 ![Screenshot 2025-03-10 at 1.20.25 PM](https://community.venus.io/uploads/default/original/2X/d/d4f2483f9d9b95eb82f54fe8fd0dc6dc443c8395.png)

### Recommendation

Based on current user behavior, further increasing the supply cap appears reasonable. However, we recommend taking a conservative approach and not raising the supply cap at this time for two key reasons. First, the total supply of WETH on Unichain is only [2,022](https://uniscan.xyz/token/0x4200000000000000000000000000000000000006#readContract), and the current supply cap has already reached 75% of this amount. Second, WETH’s DEX liquidity remains extremely limited, showing no signs of improvement since our last assessment. Currently, a 6 WETH sell incurs an 8% price slippage, indicating that liquidity constraints could hinder liquidations in stressful market conditions. Given these factors, we recommend against a supply cap increase at this time.

## USDC (Unichain)

USDC’s supply cap utilization stands at 88%, while its borrow cap utilization has reached 96%.

 ![Screenshot 2025-03-10 at 1.33.10 PM](https://community.venus.io/uploads/default/original/2X/e/ef20b0adcbcbe0a56bf17f55de1212521675d714.png)

 ![Screenshot 2025-03-10 at 1.33.30 PM](https://community.venus.io/uploads/default/original/2X/8/8b483840db6dbf177e2220e236a15c7daa4d4f4c.png)

### **Supply Distribution**

The supply of USDC is well-distributed, with all top suppliers borrowing USDC itself, significantly reducing liquidation risk.

 ![Screenshot 2025-03-10 at 1.34.08 PM](https://community.venus.io/uploads/default/original/2X/a/ae86a26f00777f49a9e6f88672994a66f8a3feb6.png)

The largest borrowed asset against USDC is USDC itself, accounting for 85.7% of the total distribution.

 ![Screenshot 2025-03-10 at 1.35.14 PM](https://community.venus.io/uploads/default/original/2X/2/2f11024729ce53f4ac3a63312e243dce478db1e2.png)

### Recommendation

Given user behavior and on-chain liquidity, we recommend increasing to supply cap to 4.3M USDC and borrow cap to 3M USDC. These values represent 75% of the on-chain supply of USDC.

# **Specification**

| **Market** | **Asset** | **Current Supply Cap** | **Recommended Supply Cap** | **Current Borrow Cap** | **Recommended Borrow Cap** |
| --- | --- | --- | --- | --- | --- |
| Unichain | USDC | 3,000,000 | 4,300,000 | 1,500,000 | 3,000,000 |

## **Disclaimer**

Chaos Labs has not been compensated by any third party for publishing this recommendation.