Cadence of Gauntlet Risk Parameter Updates

As many of you have probably noticed, Gauntlet has been providing risk parameter recommendations on a regular basis as a part of our Dynamic Risk Parameters engagement. Here, we wanted to provide some clarification on the cadence of our recommendations.

Our parameter recommendations optimize risk and capital efficiency for the Compound protocol. In order to implement parameter updates, we go through the Compound governance process which in total takes around 8 days, as described below:

  • Forum post and community discussion: 1-2 days
  • Compound Governance Proposal Created: 2 days of review
  • Voting Period: 3 days
  • Timelock after Voting Ends: 2 days
  • Execution

As a result, parameter recommendations are executed around 8 days after the recommendations are initially proposed. Although we run daily simulations to confirm that the parameter recommendations are optimal for the protocol (and cancel the vote should it be necessary), the governance process as it exists today slows down the cadence of Gauntlet’s recommendations. Gauntlet provides parameter recommendations roughly every 1.5-2 weeks due to timing guidelines of the existing governance process.

Moving forward, we are thinking of ways to streamline the parameter recommendation process so that Gauntlet’s risk management product can be delivered more dynamically. So far, the Gauntlet platform has improved capital efficiency while maintaining absolute risk amounts at reasonable levels, as discussed in our Monthly Risk Review. A more streamlined parameter update process would enable Gauntlet to deliver even more value to the Compound community. As such, we are exploring solutions that balance the trade-offs between decentralization and execution speed. We would note that there are a plethora of ways to structure solutions on-chain to limit the downsides of lower decentralization. For example, certain actions may be executed without a vote, whereas other actions would require a longer timelock and Community veto ability. We look forward to returning to the Community with more defined solutions and would welcome all thoughts and feedback.