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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