Increase Market Supply Ceilings for DOLA/USR LP Markets on FiRM

FiRM
1

Summary

This proposal seeks to increase the market supply ceiling parameters for both the Yearn-aligned and Convex-aligned DOLA/USR Liquidity Pool Token (LPT) markets on FiRM, Inverse Finance’s fixed-rate lending protocol, from the current 10,000,000 DOLA to 20,000,000 DOLA each. Given the success and positive performance of these markets since their launch on March 18th, increasing the supply ceilings will allow for greater participation.

Background

On March 18th, DOLA/USR LP markets were successfully launched on FiRM, providing users with the ability to utilize DOLA/USR LPTs from Curve Finance as collateral. These markets offer unique advantages due to the stable composition of the DOLA/USR LP, which includes DOLA as collateral, and the points program associated with USR, enhancing capital efficiency. Two distinct markets were deployed: one aligned with the Yearn autocompound strategy and another with the Convex strategy.

Since their launch, the DOLA/USR LP markets have demonstrated positive performance and user engagement, with 8.93MM in TVL and 7.5MM in borrows from 7 positions as of March 29th. Given the success of the initial launch, increasing the supply ceilings will maintain the positive momentum and encourage continued participation in these markets with increasing support from the TWG.

Risk Assessment

The existing risk assessment for USR collaterals on FiRM remains valid. Increasing the market supply ceilings does not introduce new fundamental risks but does amplify existing risks proportionally with increased volume. Continuous monitoring of the DOLA/USR LP’s performance, yields, and liquidity conditions will continue to be maintained. Should any material changes or newly identified risks emerge, parameter adjustments or additional mitigations will be proposed via governance.

On-Chain Actions

  1. Update Market Supply Ceiling for Yearn-aligned DOLA/USR LP Market: Set the market supply ceiling to 20,000,000 DOLA.
  2. Update Market Supply Ceiling for Convex-aligned DOLA/USR LP Market: Set the market supply ceiling to 20,000,000 DOLA.