Weekly RiskDAO report 11 Aug ‘23

All referenced data can be accessed directly on the Gearbox dashboard by RiskDAO.

Summary

During this week, the market digested the Curve saga. A number of stolen tokens were recovered from MEV bots or returned by the hacker. The Curve team offered a $1.9m reward (~10% of remaining missing tokens) to the hacker which has now turned into a bounty as the hacker did not accept the offer. The hacker even mocked Curve about his actions.

In the meantime, OTC deals continue: Binance Labs bought $5m worth of CRV and Aave has an ongoing vote to buy CRV worth $2m funded by the DAO treasury.

CryptoTwitter has taken to the public to debate DAO governance in lending protocols, especially when it comes to risk management. Teams such as B.Protocol and BlockAnalitica work on automated risk management tools: BPRO is rolling out a SmartLTV formula that is part of its on chain Risk Oracle. BlockAnalitica is advocating an automated interest rate model.

The whole debate is in full swing and worth following: Check out this Twitter Spaces with participation from Gearbox (Ivan), RiskDAO (Yaron) and many more.

MakerDAO’s enhanced DAI Savings Rate (EDSR) has gone live, giving depositors a maximum yield of 8%. However, this scales down as utilization is going up: It’s currently standing at 22.5%.

MakerDAO is utilizing the EDSR as a customer acquisition tool for its recently launched Spark lending protocol (an Aave fork). User can take out DAI loans (secured on ETH, for example) at 3.19% and deposit into vaults to earn the enhanced DSR (geo-blocked for US + VPN users). However, there’s been concerns that whales/large funds crowd out retail users and Rune Christensen, has drafted a proposal to cap the EDSR at 5% and align crypto borrowing rates on Spark with the EDSR (except for ETH-A, ETH-B, and ETH-C) while proposing a retroactive SubDAO token farming airdrop for Spark users to offset increased borrowing rates.

Stablecoin monitoring

GUSD liquidity increased from $2.4m to $3.1m. sUSD liquidity decreased from $16.4m to $11.2m. LUSD fell from $9.3m to $6.5m. sUSD backing recovered from 430% to 460%. LUSD backing stayed flat at ~250%.

There are no significant oracle deviations between DEX and CEX prices.

Watchlist

Over the last weeks, we highlighted how stkcvxcrvPlain3andSUSD has an outsized share within the collateral pool accounting for 40% at the top. Its weight has considerably reduced to 9.9% now. However, stETH has emerged as the new heavyweight in the collateral pool with a share of 42.2% (+570bps vs last week). Combined, these two assets make up 52.1% (+310bps) of all collateral assets. This requires monitoring to avoid the build-up of significant cluster risks.

Pools summary (weekly comparison)

DAI

Total pool size decreased again from $8.7m to $7.2m. yvDAI is the #1 asset at $3.7m (-$0.4m), followed by stkcvxcrvPlain3andSUSD at $1.2m (-$1.1m) and stkcvxFRAX3CRV-f

at $1.1m (unchanged).

Total debt fell from $7.4m to $6.1m.

The pool remains predominantly collateralized by stablecoins.

USDC

Total pool size declined from $7m to $5.9m, with the largest collateral assets being stkcvxFRAX3CRV-f at $2.3m, followed by stkcvxLUSD3CRV-f at $1.7m and stkcvxcrvPlain3andSUSD at $1.2m.

This pool also remains largely backed by stablecoin assets.

Total debt fell from $6m to $5m.

WETH

The pool amount decreased from $11.8m to $10.9m. The largest collateral assets are stETH (+$0.1m to $10.2m), FRAX (unchanged at $0.4m) and yvWETH at $0.2m. The big change in this pool is stkcvxsteCRV which went from $0.7m in deposits to nil.

The pool remains collateralized by mostly ETH or staked ETH assets.

Total debt decreased from $9.1m to $8.5m.

FRAX

New FRAX credit accounts have been opened over the last week. Collateral of $0.15m has been deposited (mostly yvCRV-FRAX) and debt worth $0.12m has been borrowed.

WBTC

The pool has no active credit accounts. All active positions were closed several weeks ago.

wstETH

Demand for borrowing stETH continues to be subdued with no active credit accounts. This is a continuation from the previous weeks.