Add Markets: MKR, AAVE, SUSHI, YFI

[jmo]

MKR, AAVE, SUSHI, and YFI are well established projects in the space and they will be valuable additions to Compound. The decision to use a starting collateral factor of 0 also mitigates the risk posed by the asset listing and we look forward to discussing how we can raise those collateral factors over time. LINK is also ripe for a CF update.

Brendan makes some good points about potential risk factors, to chime in here, one other potential risk factor is the behavior of borrowers, which can change over time. The more aggressive people are with their collateral ratio, the more collateral is at risk for liquidation. At Gauntlet, we’ve thought about these risk factors quite a bit, and I’d be happy to help with a listing framework as well.

[TylerEther]

Manually verifying the following:

cMKR: 0x95b4eF2869eBD94BEb4eEE400a99824BF5DC325b
cSUSHI: 0x4B0181102A0112A2ef11AbEE5563bb4a3176c9d7
cAAVE: 0xe65cdB6479BaC1e22340E4E755fAE7E509EcD06c
cYFI: 0x80a2AE356fc9ef4305676f7a3E2Ed04e12C33946

• Underlying addresses correct
• Admin correct
• Comptroller correct
• Decimals correct
• Implementation correct
• Initial exchange rates correct
• Interest rate models are good
• Names look good
• Symbols look good
• Source code looks good
• Contract compiled with version v0.5.16+commit.9c3226ce and optimized using 200 runs as is standard
• Everything else looks good

Now we just need some simulations similar to this one to ensure that the proposal and market addition work as expected.

Great work @getty !

[Fab10]

Would just like to advocate about the addition of xsushi vs sushi.

The idea is to bring in more liquidity to the protocol, it would be hard to draw individuals to bring in sushi itself and earn anything near the yield via sushi/Kashi.

Most holders enjoy the ability to stake then have the ability of utilizing xsushi to use as collateral while still enjoying the staking apys and the platform fee kickback.

Been doing a deeper dive into other protocols allowing xsushi to be deposited as collateral.
Cream 0%
Aave .02%
Rari 0%
Kashi .01%

I’m not familiar with the technicals of supporting the xsushi token, but would be worth a longer convo.

[getty]

The new price oracle has been deployed: UniswapAnchoredView | 0x6D2299C48a8dD07a872FDd0F8233924872Ad1071

A simulation of the new price oracle and cMKR is ready as well. Here is the snippet. I’ll post the link to the Github fork with all of the simulations tomorrow.

`#!/usr/bin/env yarn repl -s

PrintTransactionLogs

– Token holder addresses for mocking
Alias CompHolder “0x7587caefc8096f5f40acb83a09df031a018c66ec”
Alias MakerHolder “0x05e793ce0c6027323ac150f6d45c2344d28b6019”
Alias CUSDCHolder “0x5e34bc93a7506ecc8562ade4d5c8b090247a6349”

Web3Fork “https://mainnet-eth.compound.finance/@12884400” (CompHolder MakerHolder CUSDCHolder)
UseConfigs mainnet

– update to the new oracle implementation
Alias NewOracle “0x6D2299C48a8dD07a872FDd0F8233924872Ad1071”

– Delegate and propose update
From CompHolder (Comp Delegate CompHolder)
From CompHolder (GovernorBravo GovernorBravoDelegator Propose “Update Oracle” [(Address Comptroller)] [0] ["_setPriceOracle(address)"] [[(address NewOracle)]])

Print “New Oracle Set”

– Fast forward, vote, queue, execute
MineBlock
AdvanceBlocks 14000
From CompHolder (GovernorBravo GovernorBravoDelegator Proposal LastProposal Vote For)
AdvanceBlocks 20000
GovernorBravo GovernorBravoDelegator Proposal LastProposal Queue
IncreaseTime 604910
GovernorBravo GovernorBravoDelegator Proposal LastProposal Execute

– Delegate and propose update
From CompHolder (Comp Delegate CompHolder)
From CompHolder (GovernorBravo GovernorBravoDelegator Propose “Add MKR Market” [(Address Comptroller) (Address Comptroller) (Address cMKR)] [0 0 0] ["_supportMarket(address)" “_setCollateralFactor(address,uint256)” “_setReserveFactor(uint256)”] [[(address cMKR)] [(address cMKR) 0] [250000000000000000]])

– Fast forward, vote, queue, execute
MineBlock
AdvanceBlocks 14000
From CompHolder (GovernorBravo GovernorBravoDelegator Proposal LastProposal Vote For)
AdvanceBlocks 20000
GovernorBravo GovernorBravoDelegator Proposal LastProposal Queue
IncreaseTime 604910
GovernorBravo GovernorBravoDelegator Proposal LastProposal Execute

– Assert cMKR market supported
Assert True (Comptroller CheckListed cMKR)

– Ensure accrue interest works
CToken cMKR AccrueInterest

– Mint test
From MakerHolder (Erc20 MKR Approve (Address cMKR) 10e18)
From MakerHolder (CToken cMKR Mint 10e18)
Assert Equal (Erc20 MKR TokenBalance cMKR) (10e18)

– Borrow test
From CUSDCHolder (CToken cMKR Borrow 1e18)
Assert Equal (Erc20 MKR TokenBalance CUSDCHolder) (1e18)
Assert Equal (Erc20 MKR TokenBalance cMKR) (9e18)

– Repay borrow test
From CUSDCHolder (Erc20 MKR Approve (Address cMKR) 1e18)
From CUSDCHolder (CToken cMKR RepayBorrow 1e18)
Assert Equal (Erc20 MKR TokenBalance CUSDCHolder) (0)
Assert Equal (Erc20 MKR TokenBalance cMKR) (10e18)

– Redeem test (note: 50 cMKR == 1 MKR initially)
From MakerHolder (CToken cMKR Redeem 50e8)

Print “cMKR integration ok”`

Expect to see a governance proposal for adding MKR to the protocol tomorrow or in the next few days.

[getty]

The simulations for each asset can be found here

[monet-supply]

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.

Compound

Thanks to Getty and Eddy for pushing this forward!

[TennisBowling]

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

[getty]

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.

[rleshner]

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

@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.

[JacobPPhillips]

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

[joeysantoro]

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?

[getty]

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.

[3.1415r]

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.

[LawSirrah]

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.

[adamscochran]

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?

[joeysantoro]

@LawSirrah

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

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.

@adamscochran

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?

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

[elee]

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.

[getty]

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.

[rleshner]

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

[getty]

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.