Summary
This proposal seeks to increase the USDT0 supply and borrow caps on the Conflux network from 2,000,000 to 10,000,000 across dForce protocols.
The current supply cap has been fully utilized, indicating strong user demand for USDT0 on Conflux. Raising the cap will support continued growth, improve capital efficiency, and ensure uninterrupted access to USDT0-based DeFi services for users.
Background
Conflux has officially adopted USDT0, the omni-chain version of Tether built on LayerZero’s OFT standard, as its primary stablecoin standard.
USDT0 offers several advantages over legacy USDT, including:
- Unified Liquidity: Shared liquidity across connected chains, reducing fragmentation and improving capital efficiency
- Enhanced Transparency & Security: Standardized bridging with improved verification mechanisms
- Cross-Chain Expansion: Native scalability through LayerZero’s OFT infrastructure
- Optimized DeFi Routing: Eliminates wrapped assets and intermediary bridges, reducing operational complexity
As part of this transition, dForce has already integrated USDT0 into its Conflux deployment. Since launch, demand has quickly reached the existing supply cap, signaling healthy adoption and market traction.
Motivation
1. Meet Strong User Demand
The current USDT0 supply cap on Conflux has been fully utilized, indicating strong and growing user demand. As a result, users are unable to supply additional USDT0, creating an artificial constraint on participation. Increasing the supply cap removes this bottleneck and allows organic growth to continue without interruption.
2. Support Conflux’s Stablecoin Strategy
dForce is a long-term supporter of the Conflux ecosystem and is aligned with Conflux’s strategy to advance stablecoin interoperability through USDT0. Increasing the USDT0 supply cap reinforces USDT0 as the primary stablecoin on Conflux, supports deeper liquidity, and aligns dForce’s growth with Conflux’s goal of bridging traditional finance and Web3 settlement systems.
3. Improve Capital Efficiency
A higher supply cap enables deeper USDT0 liquidity to support lending, borrowing, and real-world asset use cases. This contributes to healthier utilization rates, smoother interest rate dynamics, and stronger capital efficiency across Conflux-native protocols.
4. Maintain a Strong User Experience
Increasing the cap ensures uninterrupted access to USDT0-based DeFi products and prevents supply-side limitations from impacting users. By removing friction and reducing confusion during onboarding, this change supports a smoother and more reliable experience for both existing and new Conflux users.
Implementation
If approved, the proposal will:
- Increase the USDT0 supply cap on Conflux from 2,000,000 to 10,000,000
- Keep all other risk parameters unchanged
- Take effect following the standard governance execution process
- No contract upgrades or migrations are required.
Specification
Updated Parameters for USDT0 on Conflux
| Parameter | Value |
|---|---|
| Collateral Factor (LTV) | 85% |
| Liquidation Threshold | 88% |
| Reserve Factor | 10% |
| Liquidation Penalty | 7% |
| Supply Cap | 10,000,000 |
| Borrow Cap | 10,000,000 |
| Oracle Provider | Pyth – USDT0/USD |
Conclusion
Increasing the USDT0 supply and borrow caps to 10M is a low-risk, high-impact adjustment that reflects current market demand and supports Conflux’s stablecoin strategy.
This change will:
- Unlock additional liquidity
- Improve capital efficiency
- Enhance user experience
- Strengthen dForce’s alignment with Conflux’s long-term roadmap
We recommend approving this proposal to support continued growth of USDT0 on Conflux