Add Market WBTC on Mainnet

Add Market WBTC on Mainnet

The Compound Growth Program proposes the addition of a WBTC market on Mainnet. The recent movements in the BTC assets space where more and more yield-bearing BTC assets are coming up, are generating demand for WBTC as a base asset.

Motivation

Recently Symbiotic announced accepting Bticoin on the platform. Symbiotic, like EigenLayer facilitates recursive looping strategies. Also with Babylon, the BTC LSTs have also come into play. With multiple avenues of utilization of WBTC with opportunities to earn yield on the asset, the demand for the asset is also increasing.

To make sure that Compound becomes the first major protocol to capitalize on this opportunity we propose the addition of a WBTC market on Mainnet.

Additionally, BTC LRT and LST began less than a week ago at the time of writing this proposal. The assets are still new and are working on adding liquidity on Dexes and adding oracles.

Market Details

Base Asset: WBTC

Collaterals:

Asset Company Etherscan Link
uniBTC Bedrock Link
FBTC FireBTC (Mantle) Link
swBTC Swell Link
LBTC Lombard Link
pumpBTC pumpBTC Link

It should be noted that some of these assets may be vault tokens. In that case we would urge the community to consider listing these assets when instant redemption becomes available for these assets.

Next Steps

We look forward to getting community feedback on the idea.

3 Likes

Swell supports this proposal and looks forward to integrating swBTC onto Compound!

swBTC is a yield bearing ERC-20 Liquid Restaking Token that offers liquidity for users who want to stake their WBTC in protocols like Symbiotic, EigenLayer, or Karak without locking up their WBTC. swBTC allows holders to earn native yield from restaking platforms while simultaneously leveraging swBTC across the DeFi ecosystem. It can be used as collateral in lending and borrowing protocols, DEXs, options platforms, and more.

swBTC enables users to earn restaking yields on their WBTC. As a productive asset, swBTC provides opportunities for users to take on extra leverage. It is particularly valuable for users that execute yield strategies, making it a high-demand collateral and will drive utilization in Compound.

Withdrawals for swBTC are LIVE - unlike Babylon LSTs (for now).

2 Likes

We at PumpBTC strongly support this proposal and look forward to supporting Compound.

$pumpBTC is a liquid staking token on Babylon, offering a 1:1 peg to BTC with instant liquidity. Our aim is to help BTC holders maximize yields through various restaking protocols such as Babylon and Symbiotic, essentially rebuilding WBTC/FBTC/BTCB with native yield.

We’ve partnered with chains like Babylon, Symbiotic, Fuel, Zircuit, Berachain, and Mantle, as well as AVSs like Marlin, Drosera, and Rollchains. Users who deposit WBTC/BTCB/FBTC into PumpBTC can not only enjoy Babylon’s native yield but also benefit from utilities from the Symbiotic ecosystem. As a yield-bearing asset, $pumpBTC can be integrated into various DeFi primitives, allowing users to enjoy diverse returns.

Furthermore, PumpBTC is pioneering as the first BTC LST protocol to introduce a transparency dashboard. This feature allows anyone to verify the security of their underlying assets in real-time, ensuring that every $pumpBTC issued is fully backed by a sufficient amount of BTC.

Withdrawals for $pumpBTC will be available soon. Meanwhile, users can freely trade on decentralized exchanges like Pancake and Curve. Given the current significant BTC price fluctuations, this ensures timely access to exit liquidity for users.

@sharp we can use the Asset Analysis Dashboard to get some idea of the collateral assets. ( Asset Analysis Dashboard)

What do you think can be the two reference assets to compare the collaterals listed here?

2 Likes

[Gauntlet] - WBTC Comet Recommendations

Gauntlet recommends initializing a WBTC Comet on Mainnet with the below collaterals and risk parameters:

Collateral Supply Cap Collateral Factor Liquidation Factor Liquidation Penalty
uniBTC 9 82% 87% 10%
swBTC 13 88% 91% 6%
LBTC 37 88% 91% 6%

We do not recommend initializing the following assets due to their lack of DEX liquidity:

  • pumpBTC

Comet Parameters

Storefront Price Factor: 70%

Gauntlet recommends keeping the Store Front Price Factor at the same value as the Ethereum v3 WETH Comet.

Target Reserves: 250

After Gauntlet’s forum post analyzing Target Reserves, Gauntlet recommends the following Target Reserves.

Initial Reserves: 2

Analysis

uniBTC Liquidity

Dex Category TVL (mil) Link
uniswap_v3 3.53 Link

Total TVL : 3.53M

swBTC Liquidity

Dex Category TVL (mil) Link
curve 3.46 Link
pancakeswap-v3-ethereum 0.24 Link

Total TVL : 3.66M

LBTC Liquidity

Dex Category TVL (mil) Link
uniswap_v3 10.40 Link
curve 0.26 Link

Total TVL : 10.66M

pumpBTC Liquidity

Dex Category TVL (mil) Link
curve 0.01 Link

Total TVL : 0.01M

Given the low liquidity for pumpBTC across the market we don’t recommend listing it currently and will review this collateral again in future.

Supply Cap and Liquidation Penalty

Given the varied nature of growth across the above BTC-pegged assets and the outstanding liquidity available, Gauntlet recommends setting the caps at 20% of the available TVL for assets with withdrawals enabled and 15% of the available for assets with withdrawals disabled in order to both, capture the upside while also mitigating concentration risk. Due to concentrated nature of liquidity, the slippage tolerance would be pretty low for the suggested cap amounts. Given the precedence of WETH comet for correlated assets, we recommend an LP of 6% across assets with withdrawals enabled and 10% across those with withdrawals disabled. We will continue to monitor withdrawal capabilities and the liquidity of BTC-pegged assets, adjusting liquidation penalties as necessary.

Liquidation Factor and Collateral Factor

The nascency of market and exchange rate data exhibits high noise in determining suitable parameters for Liquidation and Collateral Factor. Gauntlet recommends aligning these parameters to the most conservative parameters across LRTs on the WETH Comet. We therefore recommend a CF of 88% and an LF of 91%. For uniBTC, we recommend a CF of 82% and an LF of 87%, should the withdrawals be enabled, Gauntlet would further revise the parameters to better reflect risk profile of the asset.

uniBTC/WBTC returns

swBTC/WBTC returns

LBTC/WBTC returns

Yield Risk

Similar to ETH LRTs, BTC LSTs and LRTs have elevated yields due to points program. Staking and AVS maturity at launch will cause yield shocks and consequentially elevate slippage magnitude and liquidity on DEXs. Gauntlet would like flag this potential risk to the community.

Liquidity Risk

Liquidity Restaking Tokens (LRTs) present inherent uncertainties concerning liquidity profiles and associated slashing risks. While LRTs serve to reserve liquidity for instant in-protocol redemptions, withdrawals are constrained by rate limitations imposed by the underlying protocols once the reserve pool is exhausted. This limitation poses a potential challenge to maintaining liquidity availability.

Slashing Risk

Since this Comet involves different staking products, there is risk from a double slashing event to both assets.

Points program

Given the prevalence of incentives, we encourage the community to confirm the distribution of points to Compound users. This would enable to attract more TVL and offer competitive rates, enhancing user engagement and protocol growth.

Choice of Oracles

The above recommendations are made keeping Exchange Rate Oracles in mind. We would like to confirm the use of these oracles and get more clarity on the calculation mechanism of the getRate() functions.

IR Curve parameters

Gauntlet is aligning the interest rate (IR) parameters for the WBTC Comet with those of the WETH Comets. The supply APY at the kink is set to double the rate typically seen in other lending markets, while the borrow APY is set at 2.19%. Given the novelty of this market, we’ve chosen an 85% kink to ensure a smoother rate gradient, promoting market balance and potentially attracting borrowers seeking higher APYs. This strategic adjustment should support market stability and adapt to the anticipated demand dynamics.

Parameter Recommended Value
Annual Supply Interest Rate Base 0
Annual Supply Interest Rate Slope Low 0.012
Supply Kink 0.85
Annual Supply Interest Rate Slope High 1
Annual Borrow Interest Rate Base 0.01
Annual Borrow Interest Rate Slope Low 0.014
Borrow Kink 0.85
Annual Borrow Interest Rate Slope High 1.15

f8079402758b6cad412a55a9925db49097d25fcc_2_690x406

Considering the market equilibrium assumption of reaching 85% utilization, the following chart forecasts annualized reserves corresponding to various borrowing amounts. At $300k borrowed, the Comet would generate annual reserves of $3500. We believe these values will tend to grow more as result of increasing liquidity followed by increasing supply caps.

download (5)

Comp Rewards

Due to the novelty and the current Borrowing capacity of this comet, we recommend setting COMP rewards low. Gauntlet will continue to monitor the incentives and calibrate them depending on market conditions.

COMP Type COMP
Supply Rewards 1
Borrow Rewards 0

download (6)

1 Like

I (random comp holder and user) support adding wBTC. Despite the negative hype around it currently it’s been fairly stable/reliable for long enough that it can be reasonably trusted.

Due to a recent exploit in uniBTC’s mint() function, which allowed unequal notional swapping of ETH for WBTC, Gauntlet advises against adding uniBTC as collateral in the WBTC Comet. We recommend waiting until further audits and additional safeguards are implemented, before reviewing the asset’s risk profile again.

2 Likes

Thank you for the updates @Gauntlet , a few days ago Alphagrowth and Woof! also decided to internally hold off any deployments related to the WBTC market until we have solid security against these new assets. We are now holding off the deployment till the above listed collaterals get Chainlink pricefeeds or Proof of reserves.

2 Likes

Gauntlet recommends the below risk parameters for the following assets should the community wish to launch this comet using market rate oracles:

Collateral Supply Cap Collateral Factor Liquidation Factor Liquidation Penalty
solvBTC.BBN 18 81% 84% 10%
eBTC 32 80% 83% 10%
LBTC 200 73% 75% 5%
pumpBTC 15 75% 78% 10%

Rationale

Currently, all BTC derivatives demonstrate significant volatility compared to WBTC. The table below outlines key metrics relative to WBTC. Considering the elevated volatility levels, we recommend setting Liquidation Factors (LFs) at 2x the negative price change while considering Liquidation Penalty. This approach ensures an added margin of safety while maintaining capital efficiency.

eBTC/WBTC Volatility Metrics

Metric Value
Min Price Change -3.48%
Annual Volatility 20.87%

LBTC/WBTC Volatility Metrics

Metric Value
Min Price Change -7.80%
Annual Volatility 30.52%

pumpBTC/WBTC Volatility Metrics

Metric Value
Min Price Change -5.74%
Annual Volatility 33.61%

solvBTC.BBN/WBTC Volatility Metrics

Metric Value
Min Price Change -3.18%
Annual Volatility 18.35%

Gauntlet plans to revise the above risk parameters with more capital-efficient values and selection of collateral assets once Proof of Reserve oracles are implemented.

3 Likes

This document clarifies the Mainnet WBTC market deployment.

Issues overview

The audit report of the deployment can be found here.

  1. M1. Insufficient Reserves In cWBTC. We used the wrong address for reserves. Instead of using 0xC11b1268C1A384e55C48c2391d8d480264A3A7F4 we need to use 0xccF4429DB6322D5C611ee964527D42E5d685DD6a. Commit.
  2. L1. WBTC Mainnet Scenario Failure. Due to the new Governor, several scenarios failed. Below you can see all the successful actions.
  3. L2. Newly Added Assets Have No Supply Cap. It is made on purpose. As Comet was not deployed, we should not allow users to supply collaterals. Exactly on-chain proposal should set up the caps. commit.
  4. L3. Proposal Description Incomplete. As Comet was not deployed, the description was not finalized. commit.

Note

  1. USDS on Base proposal is active on the moment of pushing this proposal. The proposal reached the quorum and we expect that the proposal will be executed without fail. In case we need to cancel proposal 395, we need to cancel this proposal too.
  2. USDC on Linea proposal is active at the moment of pushing this proposal. We expect proposal 401 will reach the quorum and will be executed successfully. In case we need to cancel proposal 401, we need to cancel this proposal too.

PR with all the changes including 24 collaterals update - Deploy WBTC market on Mainnet by MishaShWoof · Pull Request #954 · compound-finance/comet · GitHub
PR ONLY with WBTC changes for easier review - Squash Mainnet WBTC by MishaShWoof · Pull Request #116 · woof-software/comet · GitHub - please review only this scope
Comet Proxy - TransparentUpgradeableProxy | Address 0xe85dc543813b8c2cfeaac371517b925a166a9293 | Etherscan
Comet Impl - CometWithExtendedAssetList | Address 0x652b1844270e38ae27ccf53de94207aa1d50cd0a | Etherscan
CometExt - CometExtAssetList | Address 0x4f4d5a808e2448cb12df7ac12efb12888fd9bdd5 | Etherscan
PumpBTC Price feed wrapper - ScalingPriceFeed | Address 0x351a133fd850ea81ed8a782016e308acbaddec91 | Etherscan

Actions

  1. Run Slither. Fails. :x:. Deploy WBTC market on Mainnet · woof-software/comet@6d85222 · GitHub
  2. Forge test. Success.:white_check_mark:Squash Mainnet WBTC · woof-software/comet@6d85222 · GitHub
  3. Gas Profiler. Success.:white_check_mark: Squash Mainnet WBTC · woof-software/comet@6d85222 · GitHub
  4. Scan. Success.:white_check_mark: Squash Mainnet WBTC · woof-software/comet@6d85222 · GitHub
  5. mainnet-wbtc Scenario. Success. :white_check_mark: Deploy WBTC market on Mainnet · woof-software/comet@6d85222 · GitHub
  6. Unit tests. Success.:white_check_mark: Deploy WBTC market on Mainnet · woof-software/comet@6d85222 · GitHub
  7. Eslint. Deploy WBTC market on Mainnet · woof-software/comet@6d85222 · GitHub
  8. Contract linter. Success.:white_check_mark: Squash Mainnet WBTC · woof-software/comet@6d85222 · GitHub
  9. Deployment. Success.:white_check_mark: Deploy Market · woof-software/comet@c17b696 · GitHub
  10. Enact migration with impersonate. Success.:white_check_mark: Enact Migration · woof-software/comet@6d85222 · GitHub
  11. Enact migration. [should be run by delegator] Enact Migration · woof-software/comet@6d85222 · GitHub

Description we use:

Initialize cWBTCv3 on Ethereum Mainnet\n\n

Proposal summary\n\n

Compound Growth Program [AlphaGrowth] proposes the deployment of Compound III to the Mainnet network. This proposal takes the governance steps recommended and necessary to initialize a Compound III WBTC market on Mainnet; upon execution, cWBTCv3 will be ready for use. 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

Further detailed information can be found on the corresponding proposal pull request, deploy market GitHub action run and forum discussion.\n\n\n

ENS TXT record update\n\n

USDS on Base proposal is active on the moment of pushing this proposal. The proposal reached the quorum and we expect that the proposal will be executed without fail. In case we need to cancel proposal 395, we need to cancel this proposal too\n\n

USDC on Linea proposal is active on the moment of pushing this proposal. We expect proposal 401 will reach the quorum and will be executed successfully. In case we need to cancel proposal 401, we need to cancel this proposal too.

Proposal Actions\n\n

The first proposal action sets the CometFactory for the new Comet instance in the existing Configurator.\n\n

The second action configures the Comet instance in the Configurator.\n\n

The third action deploys an instance of the newly configured factory and upgrades the Comet instance to use that implementation.\n\n

The fourth action configures the existing rewards contract for the newly deployed Comet instance.\n\n

The fifth action reduces Compound’s cWBTC reserves and transfers it to Timelock, in order to seed the market reserves for the cWBTCv3 Comet.\n\n

The sixth action transfers reserves from Timelock to the cWBTCv3 Comet.\n\n

The seventh action updates the ENS TXT record v3-official-markets on v3-additional-grants.compound-community-licenses.eth, updating the official markets JSON to include the new Ethereum Mainnet cWBTCv3 market.

Am i the only one the in roomm that is worried about wbtc (bitgo + justin sun situation)?

1 Like

there have been a wide array of conversations on this in public and private on this topic. While there is risk around who holds the keys to the WBTC multi-sig and new entrants are up and coming. Nearly all the BTC liquidity onchain in this moment involves WBTC. The proposed market is meant for participants that believe in WBTC as an asset.

Until something changes the risk entirely revolves around WBTC token and will be isolated to the WBTC market.

Pretty much. Reddit should not be used as a primary news source, the theory is as wild as those claiming America is going to be invading Canada. If anything Justin Sun is relatively trusted given that he’s quite successful in crypto, plus everything is onchain so movements would immediately be reported.

Sure, ignore Justin Sun. Seems very smart

Gauntlet would like to make further amendments to the selection of assets and their supply cap based on their prevailing liquidity conditions and risk profile, we now recommend the below assets to be listed on the WBTC comet with the following risk parameters :

Collateral Supply Cap Collateral Factor Liquidation Factor Liquidation Penalty
solvBTC.BBN 7 81% 84% 10%
eBTC 40 80% 83% 10%
LBTC 200 73% 75% 5%
pumpBTC 6 76% 78% 10%