Title: Decrease Slope 1 of USDT on JustLend to Further Decrease Borrow APY and Incentivize Higher Utilization
Author(s): Anthias.xyz Team
Submission Date: 15 August 2023
The following is a proposal by the Anthias.xyz team to decrease the Slope 1 of USDT on JustLend from its current 5% to 2.5%. This action would further reduce the borrow APY for USDT on JustLend, and we believe this would incentivize further borrowing utilization and thus lead to more revenue for the JustLend DAO and its members.
On May 31 of 2023, CoinTelegraph published this article stating that over 60% of USDT’s supply is currently issued on the Tron blockchain. USDT is the stablecoin with the highest 24-hour trading volume and highest market capitalization (according to CoinGecko data on August 13, 2023), so this is no minor statement. As the largest borrowing/lending platform on Tron, JustLend should be capturing a greater percentage of this circulating supply to its platform. To do so, the protocol needs to incentivize further borrowing of USDT on Tron.
According to JustLend documentation, the optimal utilization rate for USDT on JustLend is 80%. The current utilization rate is about 27%, so there is significant room for growth and improvement. The Anthias team would like the JustLend DAO community to consider decreasing the Slope 1 of USDT from 5% to 2.5%. Decreasing this Slope 1 would lead to a decrease in the Borrow APY when the USDT market is below optimal utilization. This will likely lead to a decrease in JustLend DAO revenue in the short term, but, if executed correctly, it should lead to more protocol revenue in the long term.
Market details for USDT on JustLend
This decrease in the Slope 1 of USDT should be executed along with an outreach plan via the JustLend and Tron Twitter accounts in order to more effectively inform the community of this great update to incentivize further borrowing. If this change is made but the community is not adequately informed, it will be unlikely to lead to the desired outcomes of greater utilization and higher protocol revenues for the DAO.
Anthias is a tool suite for easily monitoring liquidation risk for DeFi borrowing/lending markets. The Anthias team is composed of three members of the Dartmouth Blockchain club. Our philosophy is to continually provide value to the blockchain ecosystem through shipping useful products and research. The Anthias team consists of three individuals with extensive experience in DeFi, having contributed at Yeti Finance, Primitive Finance, Temple DAO, and more. We have shipped multiple grants for Euler, Aave Grants, and Compound Grants.
The Anthias team would like to gauge sentiment and hear thoughts from the JustLend community with regards to decreasing the Slope 1 of USDT to 2.5% from its current 5%. Please share thoughts/questions in the comments of this forum post, and feel free to reach out to 0xBroze (@0xBroze on Discord or @OxBroze on Telegram) with any questions.