Update FiRM Borrow Controller for the PT-sUSDe-27MAR25 and LP Markets

FiRM
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Update FiRM Borrow Controller for the PT-sUSDe-27MAR25 and LP Markets

Summary

This proposal aims to update the borrow controller for the PT-sUSDe-27MAR25 market and DOLA LP markest on FiRM to implement an improved method of handling the daily borrow limit. The changes will introduce a rolling 24-hour limit, replacing the current system, which resets the borrow limit at midnight (00:00 UTC).

Background

The borrow controller in FiRM serves as a gatekeeper for borrowing transactions, determining if users are permitted to borrow based on the following criteria:

  • Market Daily Borrow Limit: Verifies that the requested borrow amount does not exceed the remaining daily borrow limit for the market.
  • Smart Contract Verification: Checks whether the borrowing address is a smart contract and, if so, ensures it is on the whitelist.

The daily borrow limit is a key risk management feature designed to:

  • Mitigate potential DAO losses in the event of an exploit
  • Limit the financial gain for would-be exploiters

Currently, the daily borrow limit resets entirely at midnight (00:00 UTC), leading to the following drawbacks:

  • Double Borrowing Exploitability: A borrower can execute a transaction just before midnight and another immediately after, effectively doubling the daily limit in a short period.
  • Non-Linear Competition: In competitive markets like PT-sUSDe, borrowers who act first after midnight can consume the entire limit, leaving no capacity for others.

To address these issues, we propose shifting to a rolling 24-hour borrow limit. This updated mechanism will replenish borrowing capacity incrementally with each passing second, rather than resetting at a fixed time.

Implementation

The new borrow controller logic has been rigorously tested and deployed in production by Grace protocol for over 6 months. By adapting this proven system for FiRM, we can enhance risk management while maintaining operational consistency. The updated borrow controller has undergone thorough internal and external reviews to ensure its reliability and security.

This proposal focuses initially on the PT-sUSDe-27MAR25 and LP markets, which have the highest demand and urgency for improvement. Once validated, the changes will be incrementally rolled out to the remaining FiRM markets.

On-Chain Actions

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