Simple Summary
Gauntlet recommends adjusting the Interest Rate (IR) Curve in the Base v3 AERO Comet to improve utilization and reserve growth by lowering base borrow rates, borrow IR slopes, and supply IR slopes.
Given the comet’s low utilization, we recommend reducing the borrow APR at the kink from 10% to 5% and capping the maximum borrow APR at 60%, down from 235%. These adjustments aim to drive higher utilization.
We will monitor the market response to these changes, and if they do not achieve the desired impact, we may take further action, including reassessing and potentially reducing rewards. The current COMP Daily Borrow Emission is 15 tokens, and the COMP Daily Supply Emission is 15.
Specification
| Parameter | Current Value | Recommended Value |
|---|---|---|
| borrow_per_year_interest_rate_base | 0.04 | 0.022 |
| borrow_per_year_interest_rate_slope_low | 0.0706 | 0.0329 |
| borrow_kink | 0.85 | 0.85 |
| borrow_per_year_interest_rate_slope_high | 15 | 3.6667 |
| supply_per_year_interest_rate_base | 0 | 0 |
| supply_per_year_interest_rate_slope_low | 0.08 | 0.04 |
| supply_kink | 0.85 | 0.85 |
| supply_per_year_interest_rate_slope_high | 11 | 2.7733 |
Motivation
Base Asset Utilization
Reserve Growth
Analysis
Interest Rate Trend
Recommendations
The recommended IR curve has a 85% kink, corresponding to 3.4% supply APR and 5% borrow APR. The IR curve has positive reserve growth above 55% utilization.
Next Steps
- Welcome feedback from the community
- Post recommendations to on-chain proposal