Blockworks Advisory has reviewed the proposal, supports it and agrees with Kairos Research’s recommendation, including the five conditions outlined in their review. The following analysis was run independently and is offered as supporting context for the committee.
Reserve Fund sizing
Kairos notes that the proposed 20M float represents roughly a third of the Reserve Fund’s gross onchain holdings, and a larger share once other committed uses are taken into account. The figures below quantify that second point.
The Reserve Fund’s onchain visible assets currently total approximately $62.6M. Two amounts within that total are already set aside for other purposes and would not be available to absorb a loss on this facility. The first is a provision held against potential losses on the protocol’s real world asset holdings, calculated as 4.5% of total RWA exposure and against current RWA exposure of approximately $501.7M, this comes to around $22.6M. The second is a smaller buffer tied to funding rate risk, currently around $0.2M. Net of both, the Reserve Fund available to this facility specifically is $39.8M rather than the full $62.6M.
Measured against that $39.8M figure, the proposed 20M float represents roughly half of the available amount, compared with roughly a third when measured against the full $62.6M. Both are valid ways of looking at the reserve, before or after those commitments are set aside. The arithmetic behind each is shown here since the float’s share of the reserve changes meaningfully depending on which base is used, and this supports treating the net figure as the more conservative reference point for sizing. As additional context, the RWA provision moves with RWA exposure over time. Thus, a decline in RWA exposure of around a quarter from current levels would raise the net figure to approximately $45.5M and lower the float’s share to roughly 44%. This is a sensitivity comparison only and it is not a prediction or recommendation about RWA exposure levels.
Demand levels based on historical activity on a comparable facility
Historical activity on Spark’s PSM3, a comparable facility already operating on Arbitrum and Base, provides a reference point for realistic day to day usage. The analysis covers 375 days of onchain swap activity across both chains, from roughly November 2024 through late January 2026.
Typical daily usage in that data was modest. On the busiest 5% of days, activity reached around $0.6M and on the busiest 1% of days, around $3.1M. One unusually large day, around $14.7M, was tied to early adoption activity shortly after one of the two chains launched. Usage was somewhat higher on weekdays than weekends (an average of about $0.2M versus $0.1M), and it was concentrated heavily on one chain (Base) throughout the sample, with the busier chain seeing roughly ten times the stress case activity of the quieter one.
This concentration is directly relevant to how a float might be split across chains. Sizing each chain to its own usage pattern gives a stress requirement of around $10M for the busier chain and around $1M for the quieter one, a combined total near $11M. Sizing both chains identically, matching the busier chain’s requirement on both sides, gives a combined total around $20M which is in line with the proposed size.
Estimating USDe specific demand directly
Spark’s PSM3 activity is a useful reference point but measures usage of a different facility swapping different assets. Demand was also estimated directly using data specific to USDe itself. Since no equivalent USDe facility exists yet to measure directly, several methods were tested, producing noticeably different results.
Scaling Spark PSM3’s usage rate to the amount of USDe currently available on L2s produces a modest estimate, under $1M. This method likely understates actual demand, since the amount of USDe currently on L2s is small partly because a facility like this one does not yet exist to make L2 use convenient. Assuming a portion of USDe’s existing bridge volume between mainnet and L2s would shift to this new facility, using 10% as a planning assumption, produces an estimate of around $8M. Incorporating a share of L2 decentralized exchange trading volume in USDe alongside that bridge volume produces a more conservative, higher estimate of around $16M.Together, these USDe specific estimates run from under $1M to around $16M depending on method, a wide spread that reflects genuine uncertainty in the available data.
Bringing the two sizing perspectives together
The historical PSM3 comparison and the USDe specific estimates point to a combined float in the range of $11M to $20M depending on method, with the equal split historical comparison landing closest to the proposed size at approximately $20M. Reserve Fund capacity at a considered risk level supports a float in the $23.9M to $27.3M range. Taken together, the proposed size sits at the upper end of demand based estimates and comfortably below Reserve Fund capacity at accepted risk level, consistent with equal expected demand across both integrations.
Blockworks Advisory supports moving forward with the proposal on the terms outlined in Kairos Research’s review.