Increase Daily Borrow Limits to 2,000,000 DOLA for Select FiRM LP Markets

FiRM
1

Summary

This proposal seeks to increase the daily borrow limits for the same FiRM LP markets recently targeted for market ceiling adjustments. The current daily borrow limit of 1,000,000 DOLA per market will be increased to 2,000,000 DOLA to address growing borrower demand and further support FiRM’s operational efficiency.

Markets and Addresses

Market Address
yv-DOLA-scrvUSD 0x5bb8f6aAcFF2971B42F9fE6945D24726A2541CF2
DOLA-scrvUSD 0x2fed508aAc87c0e6f0b647Fe83164A7AA6eb2FC9
yv-DOLA-sUSDe 0x4E264618dC015219CD83dbc53B31251D73c2db1a
DOLA-sUSDe 0xb427fC22561f3963B04202F9bb5BCEbd76c14A99
yv-DOLA-sUSDS 0x4A33baFA8a31E4ec9649f65646022cAD1957808b
DOLA-sUSDS 0xD68d3a44d46dd50BFeBa8Cca544717B76e7C4b29
scrvUSD-sDOLA 0x63D27fC9d463Ed727676367D3F818999962737E8
yv-scrvUSD-sDOLA 0xb8bc1E9c0a2d445bc39d2A745F47619E954dD565

Background

FiRM LP markets have shown consistent growth in borrower participation and utilization rates, as highlighted in the Revised Risk Assessment of Stable LP Markets (December 2024). The recent increase in market ceilings to 50,000,000 DOLA has created a strong foundation to scale these markets further.

The current daily borrow limit of 1,000,000 DOLA per market now presents a bottleneck to borrower activity. Borrowers seeking larger amounts frequently encounter delays or limitations, reducing market efficiency and flexibility. Increasing the daily borrow limits to 2,000,000 DOLA aligns with borrower demand and eliminates operational friction, enabling sustained growth and improved capital utilization.

This proposal builds on the governance-approved update to the borrow controller, which introduced a rolling 24-hour limit. This update ensures equitable access to borrowing capacity while addressing risks of double borrowing and market monopolization.

Rationale

  1. Increased Borrower Demand: Borrowers in these markets continue to push against the current daily borrow limits, demonstrating sustained and growing interest. Raising the limits will ensure FiRM can meet this demand effectively.
  2. Improved User Experience and Operational Efficiency: Higher daily borrow limits reduce delays and enable borrowers to access larger loans without needing to split transactions across days.
  3. Alignment with Growth Strategy: Raising the daily borrow limits complements the recent increase in market ceilings, allowing FiRM to maximize utilization and strengthen its competitive position.

Risk Assessment

The Revised Risk Assessment of Stable LP Markets (December 2024) supports the proposed increase in daily borrow limits based on the following:

  • Collateral and Liquidity Health: The underlying pools for these markets demonstrate sufficient liquidity to handle higher borrowing volumes without causing instability.
  • Low Liquidation Risk: The stablecoin-paired nature of these LP markets ensures minimal price volatility, reducing the likelihood of liquidations.
  • Risk Mitigation Measures:
    • Borrow Controller Update: The recently implemented rolling 24-hour limit ensures controlled and equitable borrowing.
    • Continuous Monitoring: The RWG will actively monitor liquidity, utilization rates, and collateral health to adjust parameters as needed.

On-Chain Actions

  1. Increase Daily Borrow Limit to 2,000,000 DOLA for the following FiRM markets:
  • yv-DOLA-scrvUSD
  • DOLA-scrvUSD
  • yv-DOLA-sUSDe
  • DOLA-sUSDe
  • yv-DOLA-sUSDS
  • DOLA-sUSDS
  • yv-scrvUSD-sDOLA
  • scrvUSD-sDOLA