Borrow Cap Guardian Policy

Governance Process
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Proposal 026 set the Borrowing Cap Guardian to be the Community Multi-Sig, which has been entrusted to set/modify Borrowing Caps for individual markets.

In Discord, members of the community created an initial policy framework for how the current Guardian should manage Borrowing Caps:

  • The Guardian will increase the Borrowing Cap of a market, when the Cap has been reached, by: (a) up to 50% for newly created markets (b) up to 10% for large/existing markets.
  • The Governance process can lower, or fix, the Borrowing Cap of any market through a proposal.
  • The Borrowing Cap Guardian will take actions necessary to raise or lower a Borrowing Cap to ensure the safety of the protocol, if the situation warrants it; those situations may include; raising a Borrowing Cap to ensure borrowing liquidity is available during stressed liquidations; lowering a Borrowing Cap to prevent malicious activity

All feedback is welcome & encouraged–and this policy can be refined over time. The Governance process can change the Guardian address as well, if needed.

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(a) up to 50% for newly created markets (b) up to 10% for large/existing markets.

what is the standard for new asset?
can we say it as the new asset if it has not over 3 months after it has been added on the market?
or only latest added asset can be considered as the new one?

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@dakeshi this is a great clarifying question – thanks for raising it! And I agree, having an exact number will help the Guardians.

How long should a recently-added market be consided “new” for, to have additional flexibility in adjusting the Borrowing Cap?

  • Less than one month
  • 1 month
  • 2 months
  • 3 months
  • More than three months

0 voters

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I’m glad to see this conversation finally started. I think that the specifics stated by @rleshner are a great starting point. I hope to see the guidelines that the guardian follows become more concrete over time with knowledge attained through future experiences.

This conversation will hopefully lead to the usage of borrow caps throughout the protocol which will make hundreds of millions of dollars in assets even more secure.

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I shared this topic and got the quick survey on one of the most famous korean defi users group called Digital Assets Korea.

42% of total 7 users voted to 1 month.
You can see more detailed results in here: https://t.me/help_blackcow/60908

also, I heard that typical period for the product which can be considered as new one is 3 month on traditional market(finance area)

But 1 month would be quite long period on blockchain defi area. we could need to add 1 week option in the survey. :sweat_smile:

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The open period for Governance proposals might be too long to enact swift/emergency changes to the Borrowing Cap Guardian. Is there a way we can make a class of fast action Governance proposals, or do we assume the Community Multi-Sig fills this need? Fast action proposals could be narrowly specified in advance by a standard Governance vote so they won’t get abused.

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Borrowing side of COMP market reached it’s CAP. It’s organic and expected growth, as a result of recent COMP distribution incentive introduced to COMP market. CAP need to be raised probably to about 25M (to accomodate current borrow demand for rebalancing rates and leave a bit headroom), as currently it is preventing liquidity to reach equilibrium for COMP market. Borrowing interest is still effectively negative and needs more liquidity to enter borrow side to move rates to positive territory.