[Gauntlet] Stablecoin Recommendations for WETH Comets
Summary
Gauntlet recommends the following risk parameters for the listed assets:
Asset
Comet
Collateral Factor
Liquidation Factor
Liquidation Penalty
Supply Cap
USDC
Ethereum WETH
80%
85%
5%
50M
USDT
Ethereum WETH
80%
85%
5%
50M
USDC
Arbitrum WETH
80%
85%
5%
30M
USDT
Arbitrum WETH
80%
85%
5%
20M
USDC
BASE WETH
80%
85%
5%
20M
USDC
Optimism WETH
80%
85%
5%
15M
USDT
Optimism WETH
80%
85%
5%
10M
Analysis
Based on our analysis of WETH borrowing positions within the Lending ecosystem, Gauntlet recommends adding both USDC and USDT to the Comets. Given WETH’s high volatility relative to USDC, we advise setting the Liquidation Factor at 85% and the Collateral Factor at 80%. For context, WETH exhibits a Daily Log Volatility of 49% and a Maximum Daily Price Change of 18% over the past year.
Gauntlet wants the community to be aware that Compound v3 Comets will face a limitation compared to other multi-liquidity protocols: the Comet markets will not offer supply APY on stablecoin collateral, which is currently around ~6%. However, Comets will enable higher leverage thresholds since the stablecoin will only be used to borrow WETH.
Regarding stablecoin collateral, DAI is used less frequently than USDC and USDT for borrowing WETH. Our analysis indicates that USDC and USDT hold around 0.50% or more of the market share, whereas DAI’s market share is significantly lower.
With the provided recommendations, we would like to push for coding of these collaterals on respective Comets. We will keep the community posted when the Collaterals are ready to be deployed
Add USDT and USDC as collateral into cWETHv3 on Arbitrum\n\n
Proposal summary\n\n
Compound Growth Program [AlphaGrowth] proposes to add USDT and USDC into cWETHv3 on Arbitrum network. This proposal takes the governance steps recommended and necessary to update a Compound III WETH market on Arbitrum. 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 USDT and USDC to the WETH Comet on Arbitrum. This sends the encoded addAsset two times and deployAndUpgradeTo calls across the bridge to the governance receiver on Arbitrum.
Add USDT and USDC as collateral into cWETHv3 on Optimism\n\n
Proposal summary\n\n
Compound Growth Program [AlphaGrowth] proposes to add USDT and USDC into cWETHv3 on Optimism network. This proposal takes the governance steps recommended and necessary to update a Compound III WETH market on Optimism. 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 USDT and USDC to the WETH Comet on Optimism. This sends the encoded addAsset two times and deployAndUpgradeTo calls across the bridge to the governance receiver on Optimism.
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