Compound Migration Update (4/14/23)
Gauntlet would like to provide the community an update on the V2 → V3 Migration.
Simple Summary
Phase 2 of the V2 → V3 proposal was executed on 4/5/23. From a net borrow APY perspective, these changes incentivize top non-recursive borrowers to migrate to v3, which we will outline in this post.
Recap of second migration proposal
Phase 2 of the V2 → V3 proposal was executed on 4/5/23, with the following changes:
- Decrease v2 daily USDC supply COMP rewards from 211.20 to 161.20 (-50)
- Decrease v2 daily USDC borrow COMP rewards from 211.20 to 161.20 (-50)
- Decrease v2 daily DAI supply COMP rewards from 211.20 to 161.20 (-50)
- Decrease v2 daily DAI borrow COMP rewards from 211.20 to 161.20 (-50)
- Increase v3 daily USDC borrow COMP rewards from 281.41 to 481.41 (+200)
As a result of the proposal, we saw the following net borrow APYs for stablecoins in the protocols on 4/6/23:
| v2 DAI | v2 USDT | v2 USDC | v3 USDC | |
|---|---|---|---|---|
| Borrow APY | 2.99% | 4.05% | 3.14% | 3.81% |
| Borrow Distribution | 1.40% | 0.43% | 1.12% | 5.86% |
| Net Borrow APY | -1.59% | -3.62% | -2.02% | +2.05% |
Below are the net borrow APYs for protocols in the protocols as of 4/14/23:
| v2 DAI | v2 USDT | v2 USDC | v3 USDC | |
|---|---|---|---|---|
| Borrow APY | 3.20% | 4.88% | 3.57% | 4.27% |
| Borrow Distribution | 1.39% | 0.46% | 1.17% | 4.53% |
| Net Borrow APY | -1.81% | -4.42% | -2.40% | +0.26% |
From a net borrow APY perspective, non-recursive suppliers are still incentivized to migrate to v3.
Below is a time series of total collateral supply balances of top users from 4/4/23 (the date prior to the most recent proposal execution) to 4/13/23. Supply balances are normalized by token prices on 4/13/23 to get a better sense of true token supply increases. The “Other” category accounts for all users with ≤ $2M total collateral supplied, and these users account for 15.5% of the total v3 collateral. Using these normalized metrics, the supply has increased 12.4% from $338M on 4/4/23 to $380M on 4/13/23.
Although none of the top non-recursive v2 borrowers listed in our previous post have migrated to v3, the protocol has attracted a new user with address 0x307111465e4cedd89fa28b9768981b8768a3cabe who joined the protocol on 4/13/23 and supplied $27.6M ETH and borrowed $21.0M USDC.
As of 4/14/23, this user has further increased their supply to $50.5M ETH and borrows $34.0M USDC. This results in a total protocol collateral supply of $403M, a 19.2% increase from 4/4/23.
Gauntlet will continue to monitor the protocol and will follow up early next week with an updated proposal for phase 3 of the migration.