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.