Summary
Due to high demand for the USDC/GHO/USDT leveraged vault, we propose increasing the vault’s max borrow capacity from 2M USDC to 4M USDC.
Risks
We believe that increasing the exposure to GHO is acceptable at this time given the strong growth of on-chain GHO liquidity. If all of this capacity were to be taken up instantly, Notional would hold less than 35% of the Balancer pool and less than ~17% of total GHO liquidity on Mainnet. We believe that these are acceptable exposure levels.
Note that high-quality Stablecoin liquidity paired with GHO on Ethereum has grown by ~2.7x since the last proposal to increase capacity for this vault was submitted to the forum on April 5th.
Here was the primary GHO liquidity at that time:
| Protocol | Pools | Address | GHO Liquidity | Non GHO liquidity | % of non GHO liquidity |
|---|---|---|---|---|---|
| Maverick | USDC/GHO | 0x0d67b27c340887da87344c344c20ce60a8eb84c5 | $1,604,813 | $461,516 | 22.34% |
| Curve | USDe/GHO | 0x670a72e6d22b0956c0d2573288f82dcc5d6e3a61 | $7,924,136 | $4,155,633 | 34.40% |
| Curve | crvUSD/GHO | 0x635ef0056a597d13863b73825cca297236578595 | $246,496 | $146,977 | 37.35% |
| Balancer | USDC/GHO/USDT | 0x8353157092ed8be69a9df8f95af097bbf33cb2af | $1,442,948 | $1,106,330 | 43.40% |
| Total | $11,218,393 | $5,870,456 | 34.35% |
Today, GHO liquidity on Mainnet paired against high quality stables is much deeper:
| Protocol | Pools | Address | GHO Liquidity | Non GHO liquidity | % of non GHO liquidity |
|---|---|---|---|---|---|
| Maverick | USDC/GHO | 0x14Cf6D2Fe3E1B326114b07d22A6F6bb59e346c67 | $1,400,000 | $4,200,000 | 75% |
| Curve | USDe/GHO | 0x670a72e6d22b0956c0d2573288f82dcc5d6e3a61 | $3,900,000 | $3,500,000 | 47.29% |
| Curve | crvUSD/GHO | 0x635ef0056a597d13863b73825cca297236578595 | $1,400,000 | $1,300,000 | 48.14% |
| Balancer | USDC/GHO/USDT | 0x8353157092ed8be69a9df8f95af097bbf33cb2af | $5,200,000 | $7,000,000 | 57.37% |
| Total | $11,900,000 | $16,000,000 | 57.34% |
Aave is deeply committed to the growth of GHO as evidenced by their recent push to expand on Arbitrum. We believe this substantial increase for GHO liquidity on Ethereum makes the increase in Notional’s total GHO exposure acceptable and we are confident that GHO liquidity will continue to increase from here given Aave’s ongoing incentivization efforts.