Add Markets: MKR, AAVE, SUSHI, YFI

The simulations for each asset can be found here

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The proposal has been submitted on chain. Voting begins after the 2 day governance analysis period - you can set up or change your delegation during this period before voting goes live.

Thanks to Getty and Eddy for pushing this forward!

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The compound multisig has accepted ownership at 0x6D2299C48a8dD07a872FDd0F8233924872Ad1071. See the transaction here:
TX details

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Does anyone mind if the next proposal groups SUSHI, AAVE, and YFI? I think they will all pass unanimously. To be timely and efficient, I think we should group them.

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First off, kudos to everyone on this thread in getting cMKR proposed :clap:

@getty if there are no strong arguments against the idea of grouping AAVE/SUSHI/YFI, I think a single proposal to add the remaining assets would make a lot of sense; the updated price feed will already be live, and the addition of three should add little risk over the addition of one.

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Bundled proposal to add AAVE, SUSHI, & YFI has been submitted. Voting starts Thursday at ~ 2300 UTC.

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Excited to see these tokens potentially coming to Compound!

I’d reiterate the benefits shared above of using xSushi over Sushi, which tends to get much higher engagement on other lending platforms. @getty you said potentially both could be added?

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I think listing the underlying is more useful than listing xSUSHI, but we could certainly list it as well. Maybe in a month or two, we can evaluate the SUSHI market and consider adding xSUSHI.

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Agree that listing SUSHI makes more sense from a borrower/shorter standpoint, but from a depositor point of view, this would be an irrational thing to do. Unless you can get a fairly high interest rate that offset the xSUSHI staker’ fees, you will be better off depositing your xSUSHI on AAVE or directly in the BentoBox/Kashi (Sushiswap lending platform). Currently xSUSHI’s APR stands at 6.17% vs. supply-side interest rate of 0.43% for SUSHI on Cream, so I doubt listing SUSHI will attract much deposits.

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We may be able to use a different delegate contract that allows putting Sushi into the SushiBar. Maybe this could be similar to the delegate contract for Dai.

If this is done, we may not need to add xSushi as an additional asset.

If xSushi were the underlying asset, the functionality would be built in because the asset would already have been put into the SushiBar.

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A few things that crossed my mind with this proposal, is that while I’d love to see new assets added:

  • The assets are quite similar to Compounds largest competitor (perhaps alternative is a better word) creating two markets with such collateral overlap may increase the risk of cascading liquidity problems if any asset ever had an existential issue?

  • With Sushi in particular, there is a lot more inflation to come, and a strong alternative for staking Sushi as xSushi, so it feels unlikely this market by itself will be competitive.

  • It may have been of value to have a per asset vote?

This is a fantastic idea, the main drawback would be borrowed Sushi is not in the SushiBar but this is a small percentage of the total on other platforms.

in my opinion assets should be evaluated in the context of how strong of a fit they are for Compound. If anything being present in other markets should be positive signal if the assets are doing well there for Compound to want to capture some of that market. The existential risks if severe enough should invalidate the token for inclusion on their own

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The existential risks if severe enough should invalidate the token for inclusion on their own
hopefully i’m understanding you correctly, i think we’re on the same page?

to me, as long as the inclusion of the asset doesn’t bank run compound, it should be fine to list. of course that includes a lack of liquidity, project security, etc, etc. idk what other criteria would be needed for a ‘strong fit’

the downside of, ‘not a lot of xyzzy coin will be deposited’ i don’t think hurts anybody. the thing i feel is most important for compound is giving control of personal finances back to the user, and if the system can handle it, we should list it.

to the case of sushi - i agree that it would be the best solution in the long term, but writing then auditing that contract is gonna take some time, and for no great reason. given how modular things are, it should be pretty easy to add the improved sushi contract in the future when we have it.

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Now that all four assets are listed, it is time to talk about collateral factors. I am specifying with “initial” because these are conservative numbers and likely can go higher once the market has a month or two to settle.

MKR:

  • Traded at a large number of exchanges: Binance, Okex, Coinbase, FTX, Houbi. Between them and legitimate others, the 24hr volume looks to be around $25m

  • DEX liquidity: Uniswap v3 ~$12m volume 7-day, Uniswap v2 $20m liquidity, Suhsiswap $18m liquidity, Balancer v2 $32m liquidity

  • Notable: 16% of MKR is the Goverance Contract and 8% in the MCD Pause Proxy.

  • FDV: $2.9B

  • Initial collateral factor: 35%

SUSHI:

  • Traded at a large number of exchanges: Binance/US, Okex, Coinbase, FTX/US, Houbi, Bitfinex. Between them and legitimate others, the 24hr volume looks to be around $86m

  • DEX liquidity: Uniswap v3 ~$1.5m volume 7-day, Uniswap v2 $1m liquidity, Suhsiswap $193m liquidity

  • Notable: 12% of SUSHI is in the Sushi Treasury

  • FDV: $2B

  • Initial collateral factor: 40%

AAVE:

  • Traded at a large number of exchanges: Binance/US, Okex, Coinbase, FTX/US, Houbi, Bitfinex. Between them and legitimate others, the 24hr volume looks to be around $150m

  • DEX liquidity: Uniswap v3 ~$9m volume 7-day, Uniswap v2 $15m liquidity, Suhsiswap $7m liquidity, Balancer v1 $366m liquidity

  • Notable: 19.4% of AAVE is staked, and 15.7% is held in the treasury.

  • FDV: $5.3B

  • Initial collateral factor: 50%

YFI:

  • Traded at a large number of exchanges: Binance, Okex, Coinbase, FTX, Houbi. Between them and legitimate others, the 24hr volume looks to be around $35m

  • DEX liquidity: Uniswap v3 ~$1.5m volume 7-day, Uniswap v2 $2m liquidity, Suhsiswap $90m liquidity

  • Notable: The tokens are spread out thanks to the initial distribution.

  • FDV: $1.2B

  • Intial collateral factor: 35%

For reference: COMP

  • Traded at a large number of exchanges: Binance/US, Okex, Coinbase, FTX. Between them and legitimate others, the 24hr volume looks to be around $210m

  • DEX liquidity: Uniswap v3 ~$17m volume 7-day, Uniswap v2 $3m liquidity, Suhsiswap $14m liquidity, Balancer v2 $7m

  • Notable: The treasury holds 31.5% of minted COMP.

  • FDV: $4.5B

  • Collateral factor: 60%

Next steps:
If we can establish a rough consensus that these initial numbers are safe, I’ll make a governance proposal on Monday. Please post comments and feedback, especially if you think a CF is too high.

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Getty, thanks for proposing initial collateral factors. For comparison purposes, I’ve attached an apples:apples comparison with other protocols for the four assets:

Asset Maker Aave Cream Proposed
MKR N/A 0.65 N/A 0.35
AAVE 0.57 0.65 0.60 0.50
SUSHI N/A 0.45 0.65 0.40
YFI 0.57 0.55 0.75 0.35
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Screen Shot 2021-08-07 at 2.35.06 PM
With the addition of these four new markets, I think we should adjust the current compSpeeds. The total amount of COMP distributed to the altcoin markets (non-stable with cf) remains unchanged. Each coin will be equally incentivized.

This will be a separate governance proposal, coming Monday, due to the 10 governance action limit. Please post comments and feedback.

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With adding compSpeeds to 4 new assets, we should really look at what we can do to reallocate compSpeeds away from the borrow side. If this isn’t done, then I think the COMP distributed will become too diluted across all market’s supply and borrow sides.

We need to analyze what the % of COMP rewards will be distributed across all markets before adding compSpeeds to those 4 assets. A simple adjustment across all other markets doesn’t seem like any type of calculation (except for averaging them out) or analysis has taken place in order to assure Compound remains useful, especially within the markets that are the most liquid.

Giving YFI, for example, the same compSpeed as the UNI market doesn’t add up. It really doesn’t add up to give all 4 new assets 25% of the compSpeed as UNI’s $400M market. Those 4 assets combined are less than $10M.

Once we have separate supply and borrow comp speeds, we can do it. @TylerEther and @arr00 are working on adding that functionality. RFP 16: Dynamic COMP reward distribution

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The pragma is not locked to a specific version for cErc20Delegator.sol.
pragma solidity ^0.5.16;

However, it sounds like there’s a standard of using v0.5.16+commit.9c3226ce. This seems inconsistent.

Is there a reason it needs to be that compiler version? If so, should the pragma be locked?

100% agree with this.

Forcing depositors to choose between cSUSHI yield and xSUSHI yield is unlikely to have outcomes as beneficial as simply letting them have both.

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