Author

Chaos Labs

Overview

Chaos Labs presents an update on pumpBTC’s peg and liquidity devolvement and provides recommendations to risk off the effective quota of the asset.

Motivation

The removal of liquidity from the Uniswap V3 pumpBTC/WBTC pool described in the asset’s listing recommendation has led to increased price volatility relative to its BTC peg. In the largest remaining pool, on Curve, pumpBTC largely traded at peg, dipping following the expiration of a Pendle market in December. More recently, the minor depeg was exacerbated by two large swaps on Curve on January 13.

pumpBTC carries a 2% fee to instantly withdraw; however, the WBTC held in the instant redeem contract has also fallen sharply, limiting users’ ability to exit pumpBTC at 0.98 BTC.

Recommendation

The effects of the thin liquidity and depeg are mitigated by the asset’s use of the pumpBTC_FUNDAMENTAL oracle, as well as relatively conservative collateral parameters. However, to mitigate any potential future risk, we currently recommend temporarily lowering the asset’s Quota Limit to 0, noting that the asset has not gained traction on Gearbox.

Txn log

Txn log can be found here Md5 checksum is a3b888d8785ef8061f4e37f4a86c9164