Authors

desnakeee.eth

Summary

This proposal aims to change Interest Rate Model parameters for WETH market on Arbitrum.

Motivation

Currently leveraging wstETH contributes to more than 75% of the WETH market utilization on Arbitrum (quota utilization stats). Many previously valued points were repriced and users return to “Real” as opposed to the “Expected” yield strategies.

The problem is that profitable wstETH farming is currently possible only below 80% utilization, or even lower as there is usually nonzero quota rate. As a result, under low high-risk (high quota rate) asset utilization, supply side receives even less than the one of the safest yield sources - stETH.

Base borrow rates under current & proposed IRMs:

Utilization, %	Base borrow rate (current IRM)	Base borrow rate (proposed IRM)
75	3.28	1.875
80	4.06	3.28
90	5.63	4.69

Technical specification

Deploy new IRM and set it to be used by ETH V3 Pool on Arbitrum.

New IRM parameters

Parameter	Proposed value
r0	0
r1	1.5
r2	2.25
r3	60
U1	70
U2	90

Transaction log

Txs log can be found here. Md5 checksum is 3d6cf6cfa6f11e85294dcdd0a8393e9a.