Summary
Gauntlet recommends the following risk recommendations to the protocol:
- Increase WETH Arbitrum Comet’s weETH Supply Cap from 12,000 to 24,000
- Increase WETH Arbitrum Comet’s rETH Supply Cap from 4,500 to 7,500
Analysis
weETH Analysis
weETH DEX Liquidity
The total TVL across seven different DEX liquidity platforms amounts to $12 million.
Concentration of rsETH on Arbitrum
Compound WETH holds the third-largest number of weETH on Arbitrum, trailing behind Pendle and Aave, which maintain larger concentrations. Gauntlet will continue to monitor to ensure that Compound does not create large systematic risk to the protocol.
The largest user, identified by address 0xd4afa0704748077fa39782d131a3830a7a0fbd34, currently maintains a health factor of 1.04. The position is highly correlated with an NAV price feed with low risk of liquidation. Should a liquidation occur, Arbitrum DEX liquidity is positioned to liquidate the position.
rETH Analysis
Supply cap utilization is approaching 75%, prompting Gauntlet to recommend raising the caps to enhance capital efficiency. The three largest positions can safely be liquidated if the positions were to be undercollateralized.
Next Steps
- Welcome feedback from the community
- Post recommendations to on-chain proposal