Weekly RiskDAO report 14 March '23

All referenced data can be accessed directly on the Vesta dashboard by RiskDAO.


US Banking collapse

Last weekend saw one of the most dramatic banking events since the GFC. Three crypto-friendly banks (Silvergate, SVB, Signature) all were taken over by the FDIC/FED as they could not sustain a bank run on their deposits.

In the wake, a major stablecoin crisis was triggered as Circle disclosed having USD3.3bn in deposit with SVB. USDC and stablecoins that are backed by USDC (DAI, FRAX) all depegged causing serious ripple effects across DeFi. Crypto projects rushed to Twitter to quantify the USD-exposure to SVB. By the time the weekend was over, the US banking regulators agreed to backstop all deposits thereby limiting any losses from bank insolvencies. As a result, USDC and related stablecoins closed the $-peg. In the meantime, USDT and BTC traded at significant premiums as a rush to safety set in.

Binance “Industry Recovery Initiative”-fund to be allocated to crypto

CZ announced that $1bn from the “industry recovery initiative” would be used to purchase BTC, ETH and BNB. On Monday 13 March, BTC & ETH showed double-digit gains of >10%.

Alpha Homora x Iron Bank

Almost forgotten in last week’s carnage, this stand-off still has not been resolved. As of last week, it appeared as if AH gave in to IB’s demands and allowed AH protocol bad debt to be transferred to its users. However, this AH snapshot vote from 13 March highlights that the community is opposed to this solution and wants to hear alternative proposals. In the meantime, $40m of user deposits remain frozen on IB (ETH Mainnet).

Dashboard Highlights

The Vesta price fell as low as $0.945 on 12 March but recovered back to 1.0059 as of 13 March.

The cap utilization of gOHM decreased from 98% to 74%.

The VAR for the worst day simulation stands at zero. Current MCRs are at or above recommended levels.

The weight of $VST in the VST-FRAX has decreased from 72% to 32%.

Total pool collateral has decreased from $20.6m to $16.7m. gOHM remains the #1 collateral asset accounting for $11.5m or 70% of total collateral base, followed by DPX which stands at $2.6m (16% of total collateral) and sGLP at $0.7m (4% of total collateral).

Total debt amounts to $6.1m (-$2.5m) which equates to a utilization rate of 37.5%. The Top 10 debtors account for 52% of the total debt volume.