Chaos Labs recommends moving TWT from the DeFi Isolated pool to the Core pool.
Usage on Venus
TWT is currently listed in the DeFi isolated pool alongside BSW, ALPACA, and USDT, along with some other less-used assets. Its supply cap is currently 36% utilized, while its borrow cap is less than 1% utilized.
Given this setup, TWT is only used to borrow USDT, with all of the largest positions displaying strong health scores, indicating low chances of liquidation.
Additionally, we note that the launch of Trust Wallet Launchpool may increase on-chain activity involving TWT, including swaps, lending, and borrowing.
Recommendation
Given the anticipated increase in activity and the current structure of the market, we recommend moving TWT into the Core pool while maintaining the Collateral Factor at 50%.
We also recommend reducing its supply cap, which has been relatively underutilized. We recommend increasing its borrow cap in anticipation of increased borrow demand related to the Launchpool. This will provide Chaos Labs with the opportunity to observe the market’s use after the migration; we are prepared to increase supply and borrow caps should this prove necessary.
Following our recommendation, and given that Venus does not support a true market migration flow, we propose beginning to deprecate the market in the DeFi pool while listing TWT in the Core pool, with parameters set equivalent to the existing market and caps updated according to those below. To begin to deprecate the market on the DeFi pool, we propose reducing the Collateral Factor to 0%, preventing new borrowing, while leaving the Liquidation Threshold at 60% to not induce any additional liquidations. In the DeFi pool, the supply utilization stands at 11%. As part of the migration plan, we recommend lowering the supply cap from 3,000,000 to 700,000 (2x the current supply) to prevent significant inflows of TWT. The borrow cap is already fully utilized at 100% and cannot be reduced further.
