---
# System prepended metadata

title: 'Gauntlet Recommendations: Inter Protocol - New Asset Listing (8/14/23)'

---

# Gauntlet Recommendations: Inter Protocol - New Mint Limit stATOM 2023-11-22
## Background
Gauntlet provides an option to the IEC to adjust the risk parameters for stATOM. Based on the latest liquidity data.

### Option 1

- Increase the Mint Limit for stATOM to $1MM

### Option 2

- Increase the Mint Limit for stATOM to $1.5MM

### Option 3

- Increase the Mint Limit for stATOM to $2MM


## Analysis

At Gauntlet, we previously recommended conservative parameters for the launch of stATOM. This allowed liquidity to flow into the contracts before increasing risk thresholds.

The stATOM vaults now have ~$495k minted IST with an average collateralization ratio of 295%. Gauntlet recommends three options for updating the mint limit for stATOM to drive more capital into the Inter protocol.

## Analysis


**Markets**


**Major markets for stATOM**
| Markets | Liquidity (USD) | 10% Depth (USD) | 2% Depth (USD)|
| --- | --- |--- |--- |
|Osmosis ATOM/stATOM |$17MM|$1.05MM|$800k|
ShadeSwap ATOM/stATOM|$450K|$50K|$20K|



## Recommendations

The on-chain liquidity has increased substantially after the initial launch of the token. Based on a 10% depth number of $1.05MM currently in Osmosis. We have three options for the mint limit recommendations: $1MM, $1.5MM, and $2MM. 
Since the price impact of 10% is around $1MM, going with a mint limit of $1MM could result in the lowest potential insolvency when we experience a severe price drawdown. The insolvency amount could be exacerbated if the liquidation exceeds the pool liquidity and causes further price drawdown.


The Insolvency based on Different Price Drawdowns
![image](https://hackmd.io/_uploads/HJxVNj9N6.png)

The Liquidations based on Different Price Drawdowns
![image](https://hackmd.io/_uploads/SkJQMT5NT.png)



## Parameters

### Option 1

- Increase the Mint Limit for stATOM to $1MM

This option's potential insolvency for a 55% price drawdown is $24k. The total liquidation at this drawdown is around $700k. The insolvency for a 60% drawdown spikes to $100K with a liquidation of $670K.
This is the safest option based on the liquidity available in the Osmosis DEX. A liquidation of $700K would not cause a significant price impact (<2%). 


### Option 2

- Increase the Mint Limit for stATOM to $1.5MM

This option's potential insolvency for a 55% price drawdown is ~$27k. The total liquidation at this drawdown is around $1.1MM. The insolvency for a 60% drawdown spikes to ~$100k with a liquidation of $1MM.
This option is still manageable based on the liquidity available in the Osmosis DEX. A liquidation of $1MM can result in a price impact of 10%.
### Option 3

- Increase the Mint Limit for stATOM to $2MM


This option's potential insolvency for a 55% price drawdown is ~$35k. The total liquidation at this drawdown is around $1.5MM. The insolvency for a 60% drawdown spikes to ~$190k with a liquidation of $1.3MM.
This option is risky based on the liquidity available in the Osmosis DEX. A liquidation more significant than $1MM can result in a price impact greater than 10%. This could cause considerable price slippage in the DEX.

Gauntlet suggests a $1.5MM Mint Limit based on the current liquidity available in the pool. This ensures that the lower collateralized positions can be liquidated safely in a severe market downturn and minimize insolvencies. Since slippage could be relatively high for liquidating significant positions of stATOM, a mint limit of $1.5MM reduces the potential price impact in a market downturn. This recommended mint limit minimizes losses in an infinite mint attack (and other attacks like oracle manipulation).

*By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos*