All referenced data can be accessed directly on the Gearbox dashboard by RiskDAO.
Summary
EthCC was underway last week with some very interesting talks about lending risks, such as the one featuring RiskDAO’s very own Yaron talking about economic risk approximations (via a Uniswap-style formula for lending market TVL) and joining an Economic Risk Panel.
Overall, the market remains in good shape with US$735m inflows over the last 5 weeks, although investors maintain their focus on Bitcoin. This represents the largest run of inflows since the final quarter of 2021.
EraLend, one of the first zkSync deployed lending protocols, has been exploited for $2.8m.The attacker manipulated the oracle price in the USDC pool, all other pools were unaffected. EraLend offered a bounty of 10% without success.
MakerDAO is debating an increase of the Dai Savings Rate to 8% (aka enhanced DSR) to fuel demand for the DAI stablecoin. As utilization increases, the eDSR would decrease gradually. Borrowing rates for most stablecoins across major lending markets are much lower than these rates, allowing for profitable arbitrage strategies.
In light of constant iteration & improvement of risk management standards across DeFi lending protocols, B Protocols is introducing the SmartLTV on Sepolia testnet. It’s a smart contract system to automatically configure LTV (aka Liquidation Threshold/Collateral Factor/MCR) for lending markets. The SmartLTV is fully on-chain and based on risk-related data feeds provided by B Protocol’s new Risk Oracle.
Stablecoin monitoring
GUSD liquidity recovered from $1.7m to $2.2m. sUSD liquidity increased from $22.4m to $24.1m. LUSD liquidity further grew from $13.6m to $14.8m. sUSD backing declined from 540% to 450%. 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 20.5% now. However, stETH has emerged as the new heavyweight in the collateral pool with a share of 42% (-100bps vs last week). Combined, these two assets make up 63% (unchanged) of all collateral assets. This requires monitoring to avoid the build up of significant cluster risks.
The balance of ETH & stETH in the primary liquidity pool on Curve has halved since June driven by Lido DAO’s decision to switch off the LDO incentives from June 2023.
The pool liquidity should be sufficient for Gearbox’ size, however.
Pools summary (weekly comparison)
DAI
Total pool size increased from $7m to $7.1m. stkcvxcrvPlain3andSUSD remains the #1 asset at $3.6m (unchanged), followed by yvDAI at $2.3m (+$0.3m) and stkcvxLUSD3CRV-f at $0.7m (unchanged).
Total debt increased from $5.9m to $6m.
The pool remains predominantly collateralized by stablecoins.
USDC
There have been no weekly changes in this pool.
Total pool size stayed flat at $7m, with the largest collateral assets being stkcvxcrvPlain3andSUSD at $2.3m (unchanged), followed by stkcvxLUSD3CRV-f at $2.1m (unchanged) and stkcvxgusd3CRV at $1.2m (unchanged).
This pool also remains largely backed by stablecoin assets.
Total debt amounts to $5.9m.
WETH
The pool amount slightly decreased from $14.4m to $13.8m. The largest collateral assets are stETH (-$0.5m to $12m), stkcvxsteCRV (-$0.1m to $0.7m) and FRAX ($0.5m, unchanged).
The pool remains collateralized by mostly ETH or staked ETH assets.
Total debt decreased from $11.5m to $11m.
FRAX
There have been no weekly changes in this pool.
This pool has total collateral of $0.7m, mostly in the form of Frax at $0.4m & yvDAI at $0.3m.
Total debt stands at $0.3m.
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.