Optimize sUSDe and USDe markets borrow limits

Proposals
1

Summary

This proposal aims to adjust the borrow limits for the crvUSD/USDe, frxUSD/sUSDe, and crvUSD/sUSDe markets on Resupply Finance. The crvUSD/sUSDe market is currently nearing its borrow limit of 25 million reUSD, with only around 500,000 reUSD left to borrow. To ensure continuous support for borrowing on this market, we propose reducing the borrow limits for the crvUSD/USDe and frxUSD/sUSDe markets to 15 million reUSD each and increasing the limit for the crvUSD/sUSDe market to 45 million reUSD. This adjustment will help maintain a balance between the two markets and provide users with more opportunities to borrow and lend on the platform.

Risk Factors

Resupply’s total exposure to Ethena-related markets through Curve Lend and Fraxlend is currently at 50 million USD. The total on-chain liquidity for sUSDe on Ethereum is around 70 million USD, with a 7-day cool-down period for unstaking back to USDe. Given the potential risk from Ethena-related on-chain contagion, we recommend reducing the size of the crvUSD/USDe and frxUSD/sUSDe markets proportionately to the increase in the crvUSD/sUSDe market size. This adjustment will help mitigate the risk of potential market disruptions and maintain the overall stability of the Resupply Finance platform.

Actions to be taken

  1. Reduce the borrow limit for the crvUSD/USDe and frxUSD/sUSDE markets from 25 million to 15 million reUSD each. This adjustment will help balance the demand between the three markets and reduce the potential risk associated with Ethena-related markets.
  2. Increase the borrow limit for the crvUSD/sUSDe market to 45 million reUSD. This adjustment will provide users with more opportunities to borrow and lend on the platform, ultimately contributing to the growth and liquidity of the crvUSD/sUSDe market.

Future Increases and Considerations

In the future, when considering increasing the borrow limit for the crvUSD/sUSDe market again, we will need to reevaluate the total on-chain liquidity for sUSDe and determine if reducing another related market is necessary. As the sUSDe liquidity depth grows, we can consider future increases without the need for reduction. This will ensure that the Resupply Finance platform remains stable and secure while providing users with ample opportunities to participate in the lending and borrowing markets.

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