Simple Summary
Gauntlet recommends the following risk recommendations to the protocol:
Risk Parameters
| Status | Comet | Asset | Supply Cap | Collateral Factor (CF) | Liquidation Penalty(LP) |
|---|---|---|---|---|---|
| Current | Ronin WETH | RON | 3,000,000 | 75% | 12% |
| Proposed | Ronin WETH | RON | 0 | 50% | 20% |
| Current | Ronin WETH | USDC | 400,000 | 83% | 5% |
| Proposed | Ronin WETH | USDC | 0 | 60% | 15% |
| Current | Ronin WETH | AXS | 300,000 | 70% | 20% |
| Proposed | Ronin WETH | AXS | 0 | 50% | 25% |
| Current | Ronin WRON | WETH | 500 | 75% | 10% |
| Proposed | Ronin WRON | WETH | 0 | 50% | 20% |
| Current | Ronin WRON | AXS | 300,000 | 72% | 15% |
| Proposed | Ronin WRON | AXS | 0 | 50% | 25% |
| Current | Ronin WRON | USDC | 500,000 | 75% | 12% |
| Proposed | Ronin WRON | USDC | 0 | 50% | 20% |
Interest Rate Curve Parameters
Ronin WETH
| Parameter | Current Value | Recommended Value |
|---|---|---|
| Annual Borrow Interest Rate Base | 0.01 | 0.025000 |
| Annual Borrow Interest Rate Slope Low | 0.0155 | 0.017647 |
| Borrow Kink | 0.9 | 0.850000 |
| Annual Borrow Interest Rate Slope High | 1.26 | 0.732667 |
| Annual Supply Interest Rate Base | 0.0 | 0.0 |
| Annual Supply Interest Rate Slope Low | 0.0216 | 0.020000 |
| Supply Kink | 0.9 | 0.85 |
| Annual Supply Interest Rate Slope High | 1.125 | 0.868012 |
Ronin WRON
| Parameter | Current Value | Recommended Value |
|---|---|---|
| Annual Borrow Interest Rate Base | 0.01 | 0.025000 |
| Annual Borrow Interest Rate Slope Low | 0.017647 | 0.017647 |
| Borrow Kink | 0.9 | 0.85 |
| Annual Borrow Interest Rate Slope High | 1.5 | 0.732667 |
| Annual Supply Interest Rate Base | 0.0 | 0.0 |
| Annual Supply Interest Rate Slope Low | 0.0225 | 0.020000 |
| Supply Kink | 0.9 | 0.85 |
| Annual Supply Interest Rate Slope High | 1.339 | 0.868012 |
Rationale
Risk Recommendations
- Supply Cap Reduction: Setting supply caps to 0 prevents new suppliers from entering the market.
- Collateral Factor Reduction: This adjustment reduces capital efficiency, making the market less appealing without causing users to become liquidatable.
- Increased Liquidation Penalty: Raising penalties further disincentivizes usage by increasing the cost of liquidation, while reducing risk to the comet.
Interest Rate Curve Recommendations
The proposed updates include:
- Reducing the kink from 90% to 85%.
- Increase borrow base APY and reduce supply APY slopes. This stabilizes reserve growth across utilization levels.
Ronin WETH
Ronin WRON
These changes aim to disincentivize TVL inflows and accelerate the market’s deprecation.
Next Steps
- We welcome community feedback.