Summary
BA Labs supports onboarding syrupUSDC directly to the SummerFi Lazy protocol as an ARK to the low risk USDC fleet on Mainnet as we find that syrupUSDC has an acceptable overall risk profile. Furthermore, we also note the limitations of primary redemption mechanism of syrupUSDC, resulting in liquidity/TSI during potential withdrawals, thus raising the question for the SummerFi community if the direct exposure is neccessary and/or preferable considering current non-direct exposures to syrupUSDC.
BA Labs comments
Onboarding syrupUSDC directly to the low risk USDC fleet on Mainnet, as proposed in this proposal, would imply the type of risk not present at the moment across current active fleets, that being the liquidity/redemption risk considering the Maple protocol design.
We identify two possible ways of withdrawing deposits from Maple Finance:
- Primary redemption (not an atomic operation), as stated by Maple team here, “historically withdrawals have been serviced in <24 hours, with the maximum historically taking <7 days. Due to the underlying duration of the loans, the maximum withdrawal time in an event where all SyrupUSDC would want to redeem would be 30 days.”
- Exiting via secondary markets via Uniswap and Balancer pools, with the total of ~6m of syrupUSDC available at the time of writing.
Considering the importance of the ability to withdraw (and deposit) in atomic manner due to the architecture of the SummerFi Lazy protocol, accounting for the price impact and liquidity levels in general is crucial when deciding about the potential way of integrating the syrupUSDC product.
Note: As of now SummerFi Lazy protocol already has (non-direct) exposure to Maple Finance’s syrupUSDC via Morpho Gauntlet USDC Core and Morpho Smokehouse USDC vaults.
For the full risk assessment of Maple’s syrupUSDC product, please check our analysis done for Spark SLL.