Welcome to the latest Risk Management update, brought to you by the Qi Dao Risk Management committee. It has been a very interesting couple of weeks in crypto, so let’s take a look at what’s new in this update.
MAI/DAI LP Overview And Risk Analysis
The launch of the MAI/DAI LP as collateral for MAI is imminent, so we created a primer with an overview and overall risk analysis for the LP. If you haven’t yet read it, be sure to check it out, right here on our Medium page. TLDR, we are very excited for its potential, and cautiously optimistic.
Market Movements And Liquidity Growth
We’ve seen some good liquidity growth across a great many deal of our accepted collaterals, particularly amongst Polygon and Moonbeam tokens.
There has been a good bit of positive news for Polygon over the past couple of weeks, with Instagram rolling out Polygon-native NFTs and JP Morgan making its first deposits onto the chain which caused positive price action for the MATIC token and increased deposits onto the chain. Of particular importance for our risk metrics are large liquidity increases in bluechip tokens such as WETH and LINK. As a result of the increased liquidity, trade slippage to stables has increased almost universally across all Polygon collaterals with the exception of gameFi tokens such as SAND and GHST which saw a decrease in both metrics.
The big winner since our last update does appear to be Moonbeam whose native GLMR token has seen massive growth in liquidity. Demand for MAI on Moonbeam has also greatly increased on chain with both xSTELLA and WGLMR vaults seeing increased borrowing across the board. The DAO has already approved xcDOT vaults, and it is the committees recommendation that we move forward with this collateral as DOT liquidity has increased to over $33m from a previous assessment at $22m. While Qi Dao’s presence on Moonbeam remains small compared to other chains, accounting for just 0.2% of total MAI backing, the Moonbeam community, being lead by DEX StellaSwap appears to have enormous potential for growth over the next few years, and the DAO should position itself as a major player in the stablecoin market, particular as StellaSwap prepares to launch its MAI Metapool of stable assets.
Additionally, as a result of the latest market moves, we’ve seen an increase in higher rated collaterals, with “B+” rated tokens increasing from seven to twelve, and “B” rated tokens increasing from ten to thirteen. Collaterals in the “B” range (B+, B, B-) currently account for 71% of total MAI backing. There has been no meaning change to lower rated collaterals with “C+” or lower collaterals currently accounting for 16% of total MAI backing. “A” rated collaterals account for nearly 13% of total MAI backing, though only two collaterals currently fall within this range — ETH on Ethereum, and WETH on Polygon.
Update on m.WBTC vaults on Metis
The previous WBTC vault on Metis has been deprecated as per the recommendation in our previous update. The vault has been replaced with the Metis-native m.WBTC token (as opposed to RelayChain’s WBTC wrapped token), and successfully launched this week, with the original debt ceiling already depleted. m.WBTC liquidity continues to grow on Metis and currently has $601k in liquidity, most of it on Hermes incentivized Metis/m.WBTC LP which we expect will continue to grow as LP rewards will remain high there in order to continue increasing liquidity.
While there is currently no MAI available to be borrowed, you can find it in the vault creation page under Metis Wrapped BTC.
Update on Harmony ONE vaults
As per committee recommendation, ONE vaults have been deprecated as DEXes and liquidity continues to exit the trouble chain. All ONE liquidity appears to now be on centralized exchanges, thereby defeating the purpose of these vaults. The committee has recommended that Harmony be completely removed the the Mai Finance website in order to avoid any confusion with users. We will be removing Harmony from the risk website as soon as this happens.
Mai Finance Updates
The Mai Finance website received an update that display vault liquidations. This has been an oft-requested feature by the community and we are happy that the team has implemented this within the site. Not only will users be able to see what their current liquidation price is compared to the current token price, but the listing of previous liquidations will provide users with an easy way to track their vaults at a glance.
Risk Matrix Updates
While the matrix can continue to be found at https://riskmanagement.qidao.community, we now have a new canonical website, https://mai.watch. This will make the site address easier to remember, and brings it more inline with the core messaging of the product — keeping an eye on MAI and its backing collaterals.
With the increased need for transparency, we have made several updates to the site in relation to its connection to MAI, particular the addition of both outstanding debt amounts and debt percentages for each tracked collateral and chain. Additional, the site features a newly reworked dashboard making it easier to view relevant data at a glance. Front and center on the new dashboard are charts showcasing MAI backing breakdowns, displaying the previously live backing by chain chart, as well as new backing by collateral, backing by collateral risk grading, and backing by stable vs. volatile assets. We hope these new graphs will make it easier for users and partners to find the information they need at a quick glance.
Along with the new dashboard updates, there have been a ton of bugfixes and minor UI updates, so be sure to check out the project’s Github page for more.
Finally, the risk assessment for rETH is under consideration to be removed from the website, as liquidity for the asset continues to see lagging growth. With a C- rating, it is the opinion of the committee that rETH should not become MAI collateral until this is resolved.
Overall, another solid week for the protocol. We continue to see increased MAI adoption and growth, and volume for MAI has seen a large uptick since the launch of the Arrakis MAI/USDC LP. Currently, all hands are on deck for the launch of MAI/DAI, but expect the addition of more vault collaterals in the coming weeks.
If you want to get in touch, feel free to find us on the Qi Dao Discord, or on Twitter, @qidaorisk.