Add WBTC to WETH Comets on Ethereum and Arbitrum

If the community wishes to add the assets WBTC to following WETH Comets, Gauntlet recommends the following risk parameters:

WETH Comet on Ethereum

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
WBTC 80% 85% 5% 1000 ($70M)

WETH Comet on Arbitrum

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
WBTC 80% 85% 5% 300 ($20M)

Analysis

As mentioned in our recommendations for the Optimism WETH Comet, 54% of WETH borrowing is backed by WBTC collateral within the v2 markets. This position only represents $4.2M WETH borrow positions within Compound v2 but the relative market share is large across the Ethereum ecosystem. In Aave v3, $128 million worth of WETH is borrowed against WBTC on Ethereum, while $16 million worth of WETH is borrowed against WBTC on Arbitrum.

WETH Borrowable Amount by Collateralized Postions on Comp v2

Furthermore, WBTC exhibits a high correlation with WETH, boasting a correlation ratio of 0.98. This correlation creates an optimal scenario for attaining higher leverage while mitigating risk.

Next Steps

  • Welcome Community Feedback
  • Work with community to get asset listed on WETH Comets
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We are going to add the WBTC collateral into the markets to our backlog. Looking forward to the community feedback. WOOF team obviously supports adding WBTC as collateral, as it will definitely bring more liquidity into the protocol.

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