Sky Advisor Proposes Halting New Core Vault Borrowing

BA Labs, Sky's Core Council risk advisor, proposed halting new stablecoin borrowing through five legacy Core Vault types, while leaving existing loans in place.

The Nov. 12 recommendation would set maximum debt ceilings to zero for $ETH-A, $ETH-B, $ETH-C, WSTETH-A and WSTETH-B and remove them from the Debt Ceiling Instant Access Module, or DC-IAM. The vaults use ether or wstETH, Lido's wrapped staked ether, as collateral.

BA Labs reported 376.33 million USDS of outstanding debt across 771 open vaults. Over the preceding 365 days, debt fell 25.18% and the vault count dropped by 177, according to its analysis.

“Existing positions are not affected beyond losing the ability to mint more,” BA Labs wrote. Borrowers could still repay, add collateral and withdraw collateral under existing rules. Their positions would remain subject to liquidation as before.

Closing a Legacy Minting Route

Sky, formerly MakerDAO, uses vaults that let users lock collateral to generate DAI. That stablecoin can be converted one-for-one into USDS. The proposal would halt this direct minting route for the five vault types, rather than force repayment of the existing debt.

BA Labs cited reducing potential attack vectors as the reason for the shutoff. It said none of the five existing ceilings constrains users and argued that stopping new debt was unlikely to turn away meaningful borrowing.

The contraction was not uniform: $ETH-A's debt grew by 7.76 million USDS over the same 365-day period, BA Labs said. Its recommendation would stop further borrowing in that category too. The advisor said WBTC-A, WBTC-B and WBTC-C already have zero ceilings and are outside this change.

The proposal remains a recommendation. Removing the vault types from DC-IAM would require an executive spell—a governance-approved onchain action—under the module's rules. BA Labs' recommendation gives no execution date.