Hey @0xphilipp, thanks for the proposal! A couple comments:
- I think the deposit cap should consider both the caps in the Red Bank and Farm, since that’s the global exposure the protocol as a whole has to a particular token. Currently, for axlUSDC, the cap on the Red Bank is $3M and the axlUSDC/OSMO cap on Farm is $750k. Since on Farm the exposure to axlUSDC ends up being half of the cap (at 100% utilization), the current exposure (or global cap) to axlUSDC is $3.375M.
- Regarding MRC-30 and MRC-31, the relation of the cap as a percentage of onchain liquidity was calculated using the liquidity of the token by itself. In other words, for axlUSDC the liquidity used would be the one displayed here: $4.8M currently.
What the above means is that the current axlUSDC cap as a percentage of onchain liquidity is ~70% (3.375 / 4.8), which is high relative to all other caps on the protocol. This was corroborated in the 1st run of the deposit caps methodology, which already suggested a lower cap for axlUSDC, as reported here.
Having said that, I understand there’s currently unmet demand for using both axlUSDC and axlUSDC/OSMO on the Red Bank and Farm, respectively. To this end, we’ve been working on a new deposit caps methodology that would take into account not just onchain but also offchain liquidity to determine the deposit caps. We expect this methodology to allow assets such as axlUSDC, which have low onchain liquidity but significant offchain liquidity, to have higher caps than those that would be enabled by relying on onchain liquidity only.
We expect to propose this new methodology to the community within the next few weeks. As such, I suggest we delay this vote until after the methodology and suggested new caps are out, so that we have a more robust framework to help us make this decision.