Summary
Gauntlet recommends the following risk and IO parameters for BASE USDC Comet:
| Parameter | Current Value | Recommended Value |
|---|---|---|
| WETH Collateral Factor | 80% | 85% |
| cbETH Collateral Factor | 75% | 80% |
| cbETH Liquidation Factor | 80% | 85% |
| cbETH Liquidation Penalty | 15% | 10% |
| Daily Borrow Rewards | 8 | 5 |
| Daily Supply Rewards | 20 | 13 |
Analysis
Based on user positions and simulated Liquidations at Risk ($609k) within the BASE Comet, Gauntlet recommends increasing the WETH Collateral Factor and cbETH Collateral and Liquidation Factor to enhance capital efficiency within the USDC Comet. Given the substantial liquidity available via on-chain decentralized exchanges, large positions can be effectively managed in the event of liquidating an unhealthy position.
Top WETH Suppliers
Top cbETH Supplier
User 0x77693ff03fd85f9181e5e577b8cabfddac00880a has a collateralized cbETH position of $2.23M cbETH with a health factor of 2.62. The position is highly collateralized but there is significant liquidity of cbETH within BASE ecosystem to liquidate the collateral position if necessary. $6.7M of cbETH can be swapped to USDC with approximately 1% slippage.
Rewards Analysis
USDC Supply/Borrow Balance vs Comet Utilization
The supply of USDC within the BASE Comet has been steadily increasing since its inception. Consistent with the ongoing growth in both borrows and supplies, the incentives for USDC Comet have shown a positive trend, as reflected in our Cost per USDC KPI. This key performance indicator measures the amount of Comp rewards spent to capture and maintain total value locked (TVL). With the rising supply and borrow balances, the costs of incentives have been decreasing.
USDC BASE v3 Comet - Cost per USDC
Market has been live for 4 months with high reward APRs for both supply (2.55%) and borrow (1.4%) sides of the market. We will be recommending a gradual reduction of supply and borrow rewards in order to reduce costs and measure elasticity of users to the changes in reward APRs.
The following diagrams shows the Current vs. Recommended Comp Reward Distributions. The recommended borrow distribution value would decrease the borrow distribution APY to .9% from 1.43%. The recommended supply distribution APR will decrease from 2.59% to 1.70%.
Next Steps
- Welcome feedback from the community
- Submit on-chain proposal July 22nd