Compound V2 → V3 Migration Planning

Proposals
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This is an exciting and important conversation. To add to the initial context, there is also a Twitter Spaces with OpenZeppelin/Gauntlet/myself on 1/10/23, and the Community call on 1/11/23 where the migration path has been discussed.

To echo what others here have mentioned, because V2 and V3 don’t completely overlap in usecase, V2 should be given the opportunity to run in perpetuity. Rather than taking steps that deprecate V2 (such as lowering collateral factors or freezing markets), we should strive to transfer users and risk for V3’s core use-cases (e.g. borrowing stablecoins).

I also agree that this process should be gradual or phased, which will allow Gauntlet and the community to monitor the liquidity and market risk of each version and recommend changes (or pause) if necessary.

Here is one potential draft approach for consideration and fine-tuning:

  • Each week, for 8 weeks, there is a linear parameter adjustment proposal intended to migrate users and risk between versions
  • These proposals would migrate the COMP Distribution from V2 markets to V3, increase V2 stablecoin reserve factors, and raise supply caps on V3 to accomodate new users
  • Migrate reserves from V2 to V3 corresponding to the quantity of active borrowing volume between versions (weekly, or at the end of the migration)
  • If needed, adjust interest rate models in either V2 or V3

For the remaining strategic considerations, here are my personal views:

  • Agree with Gauntlet that the Position Migrator should be given additional educational resources and awareness
  • I don’t think that recursive or non-organic use of V2 matters, and that if this is eliminated the protocol & ecosystem will be left in a healthy position
  • By preserving V2 use-cases (such as using BAT, ZRX, SUSHI etc as collateral), they don’t have to be immediately added to V3; the community can decide which assets to add to V3 markets as collateral
  • Launching a DAI market is up to the community; that being said, V2 once re-upgraded to support the DSR, might be a superior market to V3 (unless V3 is modified to support the DSR)
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