Thank you for submitting this proposal to provide additional comprehensive risk management services to Compound Finance. Risk management is a critical function, especially as Compound expands across networks and seeks to maintain a robust and resilient protocol. While your proposal lays a strong foundation, we believe there are opportunities to refine the scope and approach to better align with Compound’s current needs and ongoing initiatives. Below are specific suggestions for consideration:
1. Trial Period: Reduce Scope and Demonstrate Impact
- Pilot on Select Markets: Rather than rolling out across all markets, consider starting with one or two strategic markets on Arbitrum or Base. These are competitive ecosystems for Compound, and demonstrating tangible value in these markets by capturing market share can serve as a proof of concept.
- Metrics of Success: Focus on onboarding additional liquidity in these markets, measured by:
- Growth in supply volume.
- Introduction and traction of new markets.
- Corresponding increases in borrow activity.
- Community Involvement: Utilize the trial period to engage actively with the Compound community. This includes participating in forums, attending governance calls, and identifying areas where ChainRisk’s expertise could expand on existing mandates or help define new ones.
2. Alignment with Compound Sandbox Initiative
- The recently proposed Compound Sandbox represents an exciting opportunity to experiment with new features and products in a controlled environment.
- ChainRisk could collaborate closely with the Sandbox team to:
- Conduct risk assessments for new experiments.
- Propose risk mitigation strategies as part of Sandbox deployments.
- Establish best practices for integrating Sandbox outputs into the broader protocol.
- By aligning with the Sandbox initiative, ChainRisk can position itself as a proactive contributor to Compound’s innovation efforts.
3. Support More Efficient Governance Methods
- Recent governance improvements, such as the Proposal 374 for expedited market updates, demonstrate Compound’s interest in streamlining governance processes.
- ChainRisk’s capability for recurrent and detailed market analysis could complement these efforts by:
- Providing timely risk insights that feed directly into more frequent governance updates.
- Demonstrating governance execution experience to improve the cadence and precision of risk-related decisions.
- Highlighting ChainRisk’s potential to support these governance enhancements would strengthen the case for its ongoing role.
Conclusion
By narrowing the initial scope, aligning with ongoing initiatives like the Sandbox, and contributing to governance efficiency, ChainRisk can build a stronger relationship with the Compound community and demonstrate its value more effectively. These steps will not only validate the immediate need for ChainRisk’s services but also pave the way for broader integration and long-term collaboration.