[NIP-36] Increase the Convex FRAX/USDC.e leveraged vault max borrow capacity

Summary

We propose to increase the FRAX/USDC.e Convex leveraged vault maxBorrowCapacity parameter from 20,000 FRAX to 250,000 FRAX. This will allow more users to enter the FRAX/USDC.e vault as the current vault utilization has reached 90%.

Proposal

The current FRAX/USDC.e Convex vault maxBorrowCapacity parameter is currently set to 20,000 FRAX such that the maximum amount of FRAX that can be borrowed from Notional to LP in the Convex pool is 20,000. This parameter was set when launching Notional V3 on Arbitrum and was set arbitrarily low given V3 had just launched. The current vault utilization is currently 90% (18,000 out of 20,000 FRAX). Increasing the maximum borrow capacity will allow non-U.S. users to borrow FRAX at a fixed or variable rate from Notional and LP the proceeds to the Convex FRAX/USDC.e pool to benefit from the pool’s yield.

The FRAX/USDC.e Curve pool currently holds $2.4M in TVL with 50% ($1.2M) of the pool being boosted through Convex. On-chain liquidity for FRAX and USDC.e on GMX, Uniswap V3, and Curve is relatively deep allowing to easily swap USDC.e for FRAX with minimal slippage. Given the pool’s size, we propose setting the maximum borrowing capacity to 250,000 FRAX or about 20% of the Convex pool size.

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