Hey @sukeshtedla, what's the deal? These kinds of USDT/USDC shortages

have been happening for weeks now. Are you applying liquidity funds to correct this? If not, then why not? This looks like an opportunity to increase TVL on tEVM that's being stymied by a lack of liquidity.

It isn't a shortage, infact they have the biggest market size among the pairs. The high rates are due to whale(s) borrowing cheaply at a fixed rate and depositing and compounding, afaik.

It's a shortage compared to demand, if not an absolute shortage. But that signals an opportunity to increase TVL if only there were more stablecoins on Omnidex or tEVM that would eventually flow into Omnidex. Right now, there's only $10 of USDT or USDC available to borrow (per the chart). Also, how are whales locking in low fixed rates if the rate is >120%?

We already deployed some. Adding more will not solve the issue and increases risk as the TLOS lending is already quite high at the moment. TLOS is being used as collateral to borrow stables. So the more capital is deployed it will be taken away. If the TLOS price falls by 50% the liquidations will happen and there isn't liquidity on DEXes to support that. We also support DEX, Lending, Perpertuals etc. The capital is already deployed as much as possible. We actively work with the Omnidex team to take necessary measures.

I don't understand this position. First of all, I thought that one of the big reasons for TEDP3 was to increase the TVL on Telos. This is a prime opportunity to do so. Isn't that the point of fostering DeFi? If so, then there's clearly untapped opportunity here that's being blocked by a lack of stablecoin liquidity. Stablecoin liquidity is the lubricating oil of DeFi, so once it starts to seize up in one place, it will in others as well. USDC/T will get pulled out of other DeFi protocols for the higher rewards on Omnidex and they, too, will start to get ground down in a lack of liquidity.

We don't have a huge portion of stables sitting idle, the funds we have are allocated across different protocols already. Only a small portion is in treasury which is reserved for any unforeseen activities or liquidity shortages on exchanges. In addition, we are coordinating with protocols to promote these opportunities to the wider DeFi ecosystem.

You are seeing a liquidity shortage on the Omnidex exchange right now. Why wouldn't you apply some of the reserve to putting stablecoins there until more liquidity flows in through your other efforts? I don't have a Ph.D in Economics or years of experience at a big trading firm like you do, Sukesh, but in my common man understanding it seems like the point of a TF liquidity team is to address situations like this.

https://t.me/omnidex1/54438

My concern is that it has locked in a lot of borrowers at that high variable rate that they can't escape because there's no stablecoin liquidity on chain. People who were okay with a 30% APY are now paying >120% and there's not much USDT around to unwind because its locked up in lending protocols with high yields. I'm not sure the TF fully understood my concerns.

how are they exactly locked? They can return the loan anytime they want if the rate doesn't suite them anymore....

The short supply of these stablecoins on tEVM could prevent that or make it more challenging.

you mean if you take 100k USDC loan to buy telos with it, then there will be not enough USDC to sell back the TLOS in order to return the loan?

If they cannot afford to pay that much, they need to repay it back asap, isn't it simple? How they do it is upto them, it doesn't make any sense for the TF to deposit liquidity so that those people pay less in interest, and I'm guessing if the TF does deposit, it'll get borrowed/withdrawn anyway.

BRIDGE

They could stop borrowing right? I'm not sure I understand

They could bridge tlos to another chain with deeper liquidity, swap for usdt/usdc and bring it back with multichain.

More likely imo is people start to just take up the opportunity of getting a high Apr for lending. If Omni lend just circulated this opportunity in whale circles some would bridge stables over

Right, but if you want to unwind your position, you aren't going to wait for whales to come

I'm going to stop talking about it. I raised the concern and it seems that I'm the only one who has it, so I will assume that it's probably nothing. At this rate, I'm either wrong or at risk of putting ideas in someone's head and I don't like the idea of either. 😅

Yeah- your stuck for now 😅

I think it is a concern and people should take that into account as part of their strategy for risk mitigation, but Telos cannot provide liquidity to protect everyone, and adding more liquidity may just lead to people being more extended