We have requested Gaunlet to review Karura’s stablecoin KSM and LKSM Risk Parameters. And below are the recommendation:
- Raising the collateral ratio from 1.8 to 2.0 for both KSM and LKSM.
- Raising the liquidation fee from 0.12 to 0.15 for both KSM and LKSM.
Since last week:
- KSM volatility has decreased from 95% to 91%
- ADV decreased from $74M to $66M
- kUSD minted decreased from about $16.0M to $13.8M.
Gaulnet recommends raising the listed above parameters to reduce the risk of future events.
There were observed several large, sudden price drops in the last week. The analysis is cognizant that borrowers need enough buffer room to respond if these drops continue to occur.
Raising the parameters will help to rebuild the treasury faster in light of the insolvent debt taken on by the protocol last week.
Here’s the Risk Management Dashboard by Gaunlet Gauntlet Autogov.
The Financial Council will take this recommendation and propose these new ratios on-chain.