12h ago
This is still subsidized, by the way. Hope everyone who aped into this at 40% and 20% and 15% are monitoring it đź«
As pointed out before, the risk here is illiquidity. There’s no incentive for the one large borrower to repay, and they also control all the parameters (hence manual adjustments of yield ever lower to a target range that’s absurdly low).
So once other depositors withdraw and utilization gets high, you’re stuck until new depositors show up.
1d ago
Checking in on this special vault to lend against SKY, the (still subsidized!) yield has now been manually adjusted down to 10%.
It’s amazing to me for people to lend into a market dominated by a single borrower with no history of repayment (so liquidity likely only comes from new depositors), who also controls the oracle, liquidation, LTV, and interest rate parameters. Especially with the interest rate they pay being manually adjusted from 20% to 10% over the last three days!
The spread between sUSDS and stUSDS is a mere 550 bps and still not at its unsubsidized or equilibrium rate. That there are people in this makes me think that yield opportunities at scale (>$5m) must be getting scarce. Because as lopsided as the risk-reward is, it’s always against a standard of “compared to what”
The top lender appears to be Fasanara, who are presumably monitoring liquidity.
Ooooh. New development from the King. Imagine trying to loop this stuff and getting burned as a borrower when the USDS you’re being paid suddenly becomes volatile SKY tokens.
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