mars

Prop 195: Deposit Caps Update

mrc: 101 title: Deposit Caps Update authors: Mars Protocol Foundation forum-url: https://forum.marsprotocol.io/t/1312

Introduction

The objective of this post is to present the results of the deposit caps methodology run as of June 2024, compare them to the current caps on Mars (Osmosis and Neutron) and offer some suggestions based on these results.

Results and Suggestions for Osmosis

The following table summarizes the caps suggested by the methodology (including both the Red Bank and Farm) for Osmosis chain and compares them against the current caps (all numbers in the table are in terms of token amounts):

|624x352

In the table above, the Final Max. Cap is the minimum between the Expert Max. Cap (which represents the maximum limit determined by onchain liquidity) and the Framework Max. Cap, which represents the cap according to the simulation methodology (see deposit caps methodology link above).

Also note that we increased Expert Max. Cap up to 100% of 90-day median on-chain liquidity (vs. previously used 30% level). The motivation is that, from a risk perspective, the most important are the caps derived from simulations of various price change scenarios (including extreme ones) and account snapshots, while expert-based caps are designed to limit extreme parameters.

The table below provides the list of assets for which the Final Max. Cap is significantly below the Current one along with the new caps proposed for these assets:

|624x120

Based on the results, we propose to decrease caps for the following assets on Osmosis chain:

  • stOSMO: from 5,000,000 to 3,500,000
  • TIA: from 200,000 to 150,000
  • wstETH: from 50 to 40

When the caps for these tokens are close to full, the methodology can be run again and the possibility of increasing the caps can be reconsidered.

The table below provides the list of assets for which the current utilization is high (% Used Current more than 75%) and the Current Cap is significantly below the Final Max. Cap, so there is some space to increase caps:

|624x178

Based on the results, we propose to increase caps for the following assets on Osmosis chain:

  • ETH: from 700 to 1,000
  • INJ: from 20,000 to 30,000
  • stTIA: from 100,000 to 150,000
  • stDYDX: from 25,000 to 35,000
  • DYDX: from 50,000 to 75,000
  • milkTIA: from 100,000 to 150,000

Note that the proposed caps are not equal to the maximum ones. We propose to increase the caps gradually, while monitoring liquidity and the state of the protocol.

Results and Suggestions for Neutron

The following table summarizes the caps suggested by the methodology for Neutron chain and compares them against the current caps (all numbers in the table are in terms of token amounts):

|624x246

The table below provides the list of assets for which the Final Max. Cap is significantly below the Current one along with the new caps proposed for these assets:

|563x97

Based on the results and given the utilization for these assets is quite low, we propose to decrease caps for the following assets on Neutron chain:

  • DYDX: from 25,000 to 10,000
  • stTIA: from 50,000 to 25,000

Copyright

Copyright and related rights waived via CC0.

Disclaimers/Disclosures

This proposal is being made by Mars Protocol Foundation, a Cayman Islands foundation company. Mars Protocol Foundation engages in research and development of the Mars Protocol. Mars Protocol Foundation and certain of its service providers and managers own MARS tokens and have financial interests related to this proposal. The aforementioned persons or their affiliates may also have financial interests in complementary or competing projects or ecosystems, entities or tokens, including Osmosis/OSMO and Neutron/NTRN. These statements are intended to disclose relevant facts and to help identify potential conflicts of interest, and should not be misconstrued as a complete description of all relevant interests or conflicts of interests; nor should they be construed as a recommendation to purchase or acquire any token or security.

This proposal is also subject to and qualified by the Mars Disclaimers/Disclosures. Mars Protocol Foundation may lack access to all relevant facts or may have failed to give appropriate weighting to available facts. Mars Protocol Foundation is not making any representation, warranty or guarantee regarding the accuracy or completeness of the statements herein, and Mars Protocol Foundation shall have no liability in the event of losses or damages ensuing from approval or rejection or other handling of the proposal. Each user and voter should undertake their own research and make their own independent interpretation and analysis of all relevant facts and issues to arrive at their own personal determinations of how to vote on the proposal.