Add Collateral cbBTC to WETH Market on Base and Mainnet
Introduction
With the upcoming launch of cbBTC as an Ethereum-compatible version of the Bitcoin, the Compound Growth Program recommends listing cbBTC to ETH markets on Mainnet and Base chains. This recommendation was made after conversations with sources directly connected to cbBTC token.
Preamble:
Type: Collateral Addition to Mainnet and Base
Authors: sharp
Motivation
One of the leading BTC assets on Ethereum is under spotlight due to their recent partnerships. Multiple alternative, Ethereum Friendly BTC assets have been floated. Compound Growth team is in talks to collaborate with most of the assets. Coinbase recently announced its intentions for cbBTC. Anticipating the possibility of high demand of cbBTC, the Compound Growth Program proposes the addition of cbBTC as a collateral on Mainnet and Base ETH markets.
Important note: cbBTC is not yet launched, the estimated date of launch is TBD. But Coinbase has offered Compound a day 1 launch partnership and co-marketing. While cbBTC is being treated as a warm lead, with the growth program working to give some prelaunch work, many of the factors affecting the launch are yet to be determined.
Firstly, the on-chain proposal for integrating the collateral will be launched only after cbBTC is launched on-chain. Secondly, we are also working to increase the collateral limits on the Mainnet ETH market, which is also a variable in this integration. Final details will be discussed at the time of launch, but as competitors may also be in the race to capture bigger share of the asset, we’re making preparations beforehand.
Next Steps
We invite the community to give their feedback and recommendations for the asset. Once the recommendations are provided, we will proceed to coding part of the integration.
[Gauntlet] - cbBTC Risk Recommendations for Mainnet WETH/USDT/USDC and Base USDC/WETH Comets
If the community wishes to add the assets cbBTC to following Comets, Gauntlet recommends the following risk parameters:
Ethereum
USDC Comet on Ethereum
Collateral
Supply Cap
Collateral Factor
Liquidation Factor
Liquidation Penalty
cbBTC
93
80%
85%
5%
USDT Comet on Ethereum
Collateral
Supply Cap
Collateral Factor
Liquidation Factor
Liquidation Penalty
cbBTC
93
80%
85%
5%
WETH Comet on Ethereum
Collateral
Supply Cap
Collateral Factor
Liquidation Factor
Liquidation Penalty
cbBTC
93
80%
85%
5%
Base
USDC Comet on Base
Collateral
Supply Cap
Collateral Factor
Liquidation Factor
Liquidation Penalty
cbBTC
45
80%
85%
5%
WETH Comet on Base
Collateral
Supply Cap
Collateral Factor
Liquidation Factor
Liquidation Penalty
cbBTC
45
80%
85%
5%
Analysis
Given the anticipation of cbBTC’s launch, Gauntlet would like to provide risk recommendations if the community wishes to onboard the asset. Although there are no prevailing market data pertaining to cbBTC, given it’s mirroring nature to WBTC, Gauntlet can recommend parameters based on WBTC’s precedence.
Supply Caps
Gauntlet proposes a $5M cap across Mainnet instances, targeting an initial TVL equilibrium of $50M. Setting caps at 10% of the projected TVL strategically positions Compound to maximize potential upside while managing risks effectively. Historical data from Coinbase assets show substantial liquidity for cbETH on Mainnet, suggesting potential robust support for cbBTC as well. Gauntlet will continue to closely monitor the market dynamics and adjust the supply caps as necessary to align with evolving conditions.
For Base instance we recommend setting the supply cap at $2.5M, half of the value set for Mainnet
Liquidation Factor, Collateral Factor and Liquidation Penalty
Due to the similarity in the nature of assets, we recommend aligning cbBTC’s CF, LF and LP to that of WBTC on that Comet. For Base, although there is no precedence, we recommend setting the same LF, CF and LP as those set in the Mainnet Comets. We therefore recommend a CF of 80%, LF of 85% and an LP of 5%.
Add cbBTC as collateral into cUSDCv3 on Ethereum\n\n
Proposal summary\n\n
Compound Growth Program [AlphaGrowth] proposes to add cbBTC into cUSDCv3 on Ethereum network. This proposal takes the governance steps recommended and necessary to update a Compound III USDC market on Ethereum. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n
Add cbBTC as collateral into cUSDTv3 on Ethereum\n\n
Proposal summary\n\n
Compound Growth Program [AlphaGrowth] proposes to add cbBTC into cUSDTv3 on Ethereum network. This proposal takes the governance steps recommended and necessary to update a Compound III USDT market on Ethereum. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n
Add cbBTC as collateral into cWETHv3 on Ethereum\n\n
Proposal summary\n\n
Compound Growth Program [AlphaGrowth] proposes to add cbBTC into cWETHv3 on Ethereum network. This proposal takes the governance steps recommended and necessary to update a Compound III WETH market on Ethereum. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n
Compound Growth Program [AlphaGrowth] proposes to add cbBTC into cUSDCv3 on Base network. This proposal takes the governance steps recommended and necessary to update a Compound III USDC market on Base. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n
The first proposal action adds cbBTC to the USDC Comet on Base. This sends the encoded addAsset and deployAndUpgradeTo calls across the bridge to the governance receiver on Base.
Compound Growth Program [AlphaGrowth] proposes to add cbBTC into cWETHv3 on Base network. This proposal takes the governance steps recommended and necessary to update a Compound III WETH market on Base. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n
The first proposal action adds cbBTC to the WETH Comet on Base. This sends the encoded addAsset and deployAndUpgradeTo calls across the bridge to the governance receiver on Base.
. 