Weekly RiskDAO report 19 May ‘23

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

Summary

Tether wants to deploy its profits towards BTC purchases. The company will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin.

The Ethereum beacon chain experienced a temporary issue, halting transaction finalization for roughly 25 mins. Whilst it was initially unclear what the cause is, developers have released updates over the weekend for two Ethereum software clients, Prysm and Teku, to address the finality issue. The Ethereum Foundation stated the problem seemed to stem from high load on some of the consensus layer clients due to an “exceptional scenario.”

Aragon DAO is experiencing significant turmoil over its treasury as the association has repurposed its $177m treasury into a grants program for developers working on its software. The move was preceded by a community proposal to hand over control of the treasury to tokenholders which was initiated by ‘Risk Free Value Raiders’. Aragon Association cited the risk of a 51% governance attack by RFV Raiders to take over the treasury. This tweet is a detailed post-mortem on all the events.

ParaSpace, an NFT lending protocol, is in turmoil after its CEO, Yubo Ruan, was accused of embezzlement, leading to users withdrawing over $50 million worth of NFTs. Ruan allegedly failed to return 2,909 ETH belonging to users and is suspected of distributing nearly half of these assets to unknown addresses and exchanges. The entire saga caused a “bank run” on Paraspace which pushed APYs >90%.

MakerDAO has unveiled the 5 phases of the Endgame which includes: A rebrand of MKR & DAI, enable SubDAOs, build AI tools for governance, Governance Participation Rewards, and eventually build Maker’s own chain.

Stablecoin monitoring

GUSD liquidity plummeted from $35m to $12m. sUSD liquidity stayed flat at $20m. LUSD liquidity declined marginally to $22m. sUSD backing recovered from 366% to 422%. LUSD backing stayed flat at 260%.

There are no significant oracle deviations between DEX and CEX prices. The only deviation standing out is the sUSD CEX price which is 2.6% below the oracle price.

Watchlist

stkcvxcrvPlain3andSUSD has an outsized share within the collateral pool as it accounts for 37% (+300bps) of the total. The ratio has come down from a peak of ~40%. We continue monitoring this ratio to avoid concentration risk from building up.

Pools summary (weekly comparison)

DAI

Total pool size declined by $0.1m to $13.3m. stkcvxcrvPlain3andSUSD remains the #1 asset at $7.8m (unchanged), followed by stkcvxgusd3CRV at $3.4m (unchanged) and yvDAI at $1.2m (unchanged).

Total debt also declined by $0.1m to $11.2m.

The pool remains predominantly collateralized by stablecoins.

USDC

Total pool collateral stayed flat at $20.2m, with the largest collateral assets being stkcvxcrvPlain3andSUSD at $13m, followed by stkcvxgusd3CRV at $3.8m and stkcvxFRAX3CRV-f at $1.3m.

This pool also remains largely backed by stablecoin assets.

Total debt remained unchanged at $16.5m.

WETH

The pool declined from $24.5m to $21.4m. The largest collateral assets are stETH (-$0.6m to $17.1m), stkcvxsteCRV (-$2.6m to $3.2m) and FRAX ($0.5m, unchanged).

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

Total debt declined from $20m to $17.3m.

FRAX

This pool has total collateral of $3.7m (unchanged), mostly in the form of stkcvxgusd3CRV

($1.8m), stkcvxcrvPlain3andSUSD ($0.9m) as well as yvDAI ($0.8m).

Total debt stands at $3m.

WBTC

This is a relatively small pool with $0.4m in deposits (denominated in stETH) and $0.3m in loans. It’s heavily concentrated with one depositor and one borrower.

wstETH

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

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