[Gauntlet] Compound v2 Deprecation Phase 9 (02/08/2024)

Simple Summary

For Phase 9 of the Compound v2 deprecation, Gauntlet recommends decreasing the Collateral Factor for v2 collateral assets. Specifically, Gauntlet recommends the following changes:

  • Decrease AAVE Collateral Factor from 43% to 38%
  • Decrease BAT Collateral Factor from 50% to 45%
  • Decrease COMP Collateral Factor from 30% to 25%
  • Decrease LINK Collateral Factor from 49% to 44%
  • Decrease MKR Collateral Factor from 43% to 38%
  • Decrease SUSHI Collateral Factor from 37% to 32%
  • Decrease YFI Collateral Factor from 45% to 40%
  • Decrease ZRX Collateral Factor from 35% to 30%

Analysis

Risk-off Liquidations

The recommended Collateral Factor decreases would not currently cause new liquidatable user positions.

Relevant Users with Low Health Factors

When determining what user positions will be most affected by the recommended Collateral Factor decreases, we assess the following:

  1. Size of the position
  2. Health Factor of the position
  3. How much the position’s Health Factor will change due to the Collateral Factor changes

1) Size of the position

We only include positions that have > $5k borrows.

2) Health Factor of the position

We only include positions whose Health Factors are less than 1.17 (Borrow Usage greater than 85%) after the Collateral Factor decreases.

3) How much the position’s Health Factor will change due to the Collateral Factor changes

We only show accounts that become > 5% closer to becoming liquidatable due to the Collateral Factor decreases. For example, a user may have a position with a Health Factor of 1.1, with 99% of their supply in ETH and 1% in COMP. In this case, leaving ETH Collateral Factor unchanged and decreasing COMP CF by 5% will not significantly impact this user’s Health Factor. As a result, we will not show these types of positions.

The below figure shows the top 4 highest borrowing user positions whose Health Factors are less than 1.17 (Borrow Usage greater than 85%) and become > 5% closer to becoming liquidatable after the Collateral Factor decreases.

The table below shows all positions > $5k borrows whose Health Factors are less than 1.17 (Borrow Usage greater than 85%) and become > 5% closer to becoming liquidatable after the Collateral Factor decreases.

User Address Total Supply Balance (USD) Total Borrow Balance (USD) Initial Borrow Usage New Borrow Usage Initial Health Factor New Health Factor % Closer to Liquidation
0xc6a58d687d67eda6451a2f55da49104c8326497d $125.6k $91.4k 93.92% 94.70% 1.065 1.056 12.83%
0xcdd681467221379db0caa005fbfb5c899384aaa2 $79.4k $26.6k 77.91% 88.16% 1.284 1.134 46.40%
0xd8ff835d432bd6de2a507203e430380343615e56 $40.0k $19.9k 89.30% 93.03% 1.12 1.075 34.86%
0x87279585d52f534a2d2e453518cd7890c5762d19 $16.9k $11.7k 91.12% 92.02% 1.097 1.087 10.14%
0xcd49361e9286fee25e11cb228f99b8dcd35de988 $14.0k $7.0k 86.72% 90.30% 1.153 1.107 26.96%
0xbb9a92673522f404445521225fb0387b687a13a0 $11.4k $6.6k 84.69% 85.97% 1.181 1.163 8.36%
0x34bbc9a46b09283698ba7aa1c273e8b4e9f7bcc3 $22.1k $5.8k 82.50% 97.34% 1.212 1.027 84.80%

In total, these positions have $168k borrows.

We will continue to rerun these liquidation analyses and update the community if the Collateral Factor decreases cause any risk-off liquidations and/or relevant Health Factor decreases.

Next Steps

Target on-chain vote 2/12/24

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On-chain proposal has been published here.

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The proposal has passed and been executed. We thank the community for their participation.

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