- Risk premiums and maximum debt ceilings assume liquidations 2.0 and are calculated based on recent market conditions
- Negative competitive rates are mostly due to liquidity mining rewards and Compound and Aave, as well as interest and rewards earned on deposited collateral
- Lending products are not standardized across defi and cefi lenders, and therefore rates can not be strictly compared on a like for like basis
Source: Compound cUSDC
Borrowing rates have begun to trend upwards over the past month on defi lending platforms Compound and Aave. However, they are still well below levels seen during the bull market until May of this year. If the trend continues, there may be some scope to raise borrowing rates at the next OMC meeting while remaining competitive.
Aave has also recently broadened their liquidity incentive program to include deposit subsidies for several collateral assets (including UNI, YFI, and BAL). While this reduces incentives available for borrowing stablecoins (increasing Maker’s competitiveness in general), it also leads to lower effective borrowing costs for users of these collateral assets. This will increase competitive pressure on related Maker vault types.
Source: Coinalyze FTX ETH-Perp Chart
In centralized trading venues, funding rates have increased markedly from last month, showing consistently positive borrowing costs for taking leverage on ETH. This hasn’t yet carried over to significant increased demand for Maker’s ETH vault types.
We propose not to change any parameters at this time. In our view the covered parameters (stability fees, debt ceilings, and debt ceiling IAM metrics) are well positioned given current conditions.
Because no changes are proposed, there will not be a poll or executive vote following from this post.