Summary
A proposal to:
- Increase SolvBTC’s supply and borrow caps on Venus’s BNB Core deployment.
Motivation
SolvBTC (BNB Core)
SolvBTC has reached 79% supply cap utilization and 40% borrow cap utilization.
Supply Distribution
SolvBTC’s supply is somewhat concentrated, with the largest user accounting for 25% of the total supply. The top four suppliers account for 77% of the total.
However, these users maintain relatively strong health positions, and the largest is borrowing only correlated assets, presenting little risk of liquidation.
The most popular asset borrowed against SolvBTC is BTC.B, again reducing the risk of liquidation.
Borrow Distribution
The top borrowing positions present limited risk, with the largest being the top user described above. The second largest is at moderate risk for liquidation, but on-chain liquidity is sufficient to liquidate the position.
Liquidity
SolvBTC’s on-chain liquidity has been relatively stable since the start of November, with a 50 SolvBTC swap to USDC incurring 10% price slippage. This is sufficient to support a supply and borrow cap increase.
Recommendation
Given user behavior and on-chain liquidity, we recommend doubling the supply and borrow caps. This increase is backed by Chaos Labs’ risk simulations, which consider the user’s behavior, on-chain liquidity, and price impact, ensuring that the higher cap does not introduce additional risk to the platform.
Specification
| Market | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| BNB Core Pool | SolvBTC | 200 | 400 | 55 | 110 |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.