Why is there even a borrow cap on COMP? Its the only asset on Compound with a borrow cap.
Possible solution::
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Set 100% market utilization at, or near, the borrow cap for borrowers only. When deriving the supplier’s interest rate:
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If supply > borrow cap Then,
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- utilization % = (total borrow / supply) / 2
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Else If supply < borrow cap Then,
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- utilization % = (supply / total borrow) / 2
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Else If supply = borrow cap Then,
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- utilization % = 50% or 0.5
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End If
If an asset has a borrow cap (like cCOMP) then the Compound community should NOT use the standard “Interest Rate Model” (IRM). The economics of Utilization vs. APY break down once the supply increases beyond the borrow cap since the standard IRM uses the percentage borrowed from total supply as the utilization percentage. An IRM (that accounts for a borrow cap) would have to make 100% utilization be within 10% of the borrow cap which would make since, because the maximum amount of COMP that can possibly be borrowed is borrowed.
I think a borrow cap could be implemented on markets, but only as a percentage of the current supply, and only when/if a market’s interest rate gets too out of whack - usually right where the fold is when looking at the IRM chart.
I noticed while looking through the forum, there was a proposal that caught my eye. It enabled borrow caps to be enabled at a later date. Here is the proposal:
Honestly, to me, this whole cCOMP ordeal looks completely doctored up and pre-planned. Those that have a big bag of COMP can supply it to get even more, but those that don’t have a bag, must buy COMP and/or slowly build up a COMP balance