Summary

This proposal suggests adjusting the USDC pool Interest Rate Model (IRM) to better align with recent collateral dynamics. Specifically: • Shift the right-most kink to 92% utilization. • Lower the target rate closer to 0.5%. • Reduce the maximum borrowing rate at 100% utilization.

Motivation

Recent updates to the rstETH collateral incentivization program require a recalibration of the IRM to remain aligned with expected collateral yields.

Additionally, ongoing withdrawal frictions in collateral markets limit borrower responsiveness to supply changes. Without IRM adjustments, this can lead to persistently high utilization and borrowers' losses.

Updating the IRM parameters ensures healthier utilization ranges, keeps borrowing rates sustainable, and reduces systemic risk from liquidity constraints.

Specification

Target IRM parameters: U_1: 70% U_2: 92% R_base: 0% R_slope1: 0.2% R_slope2: 0.3% R_slope3: 14.5% isBorrowingMoreU2Forbidden: true

Transaction log

Md5 checksum is 9e07db1455d78779d7b94f751d1feb89 Txs log is located here