Content
@
0 reply
0 recast
0 reaction
alixkun🟣🎩🍡
@alixkun
'sup team! I'd love to have some insights about the following case: Right now on Morpho, net APY for the Gauntlet USDC Prime (less risk) and Core (more risk) respectively offer 20% and 12.5%. It seems counter intuitive given they use fairly similar assets (different allocation oc), and the one supposed to be more conservative display almost x2 the rate of the riskier one. Could someone, maybe @kugusha.eth or @merlinegalite could walk me through a concrete case that could lead to that situation? Really curious to understand the mechanisms behind it. 🙏
1 reply
1 recast
3 reactions
kugusha 🦋
@kugusha.eth
Great catch with this opportunity 🦋 Risk is defined by the markets that the vault is allocating its liquidity to. For Core vault it's only WBTC and wstETH atm. There's a very high demand on borrowing USDC with these two collateral assets which is the reason for 20% APY. If you check the Prime vault and its markets, there're also MRK, tBTC, pufETH, and a few more assets. The borrowing demand against these assets is lower atm. Lmk if that's helpful :)
2 replies
0 recast
1 reaction
alixkun🟣🎩🍡
@alixkun
Hmm, I see. But from Gauntlet point of view though, since WBTC & wsETH is part of their Prime portfolio anyway, wouldn't it be better to reallocate to vaults where the demand is higher when they see that type of market movement? Is that a sign that they're not reactive curators? 🙃
1 reply
0 recast
1 reaction
kugusha 🦋
@kugusha.eth
The curators always want to keep each market as close to target utilization rate (90%) as possible, so they could relocate the liquidity between one highly utilized and under-utilized markets when there's an opportunity for it. If they take some liquidity from tBTC for example, it will increase the rates on USDC/tBTC market.
1 reply
0 recast
1 reaction
