[Gauntlet] Ethereum v3 USDC - targetReserves Recommendations (02/21/2024)

Simple Summary

Gauntlet recommends increasing the targetReserves in Ethereum v3 USDC from 5M to 20M in order to allow the buyCollateral function to successfully be called in the future even when the comet’s USDC reserves exceed 5M.


Role of the targetReserves Parameter

Per Compound’s documentation, the targetReserves parameter is:

The target amount of reserves of the base token. If the protocol holds greater than or equal to this amount of reserves, the buyCollateral function can no longer be successfully called.

This was an experimental design choice for the protocol to HODL some riskier assets once a certain amount of reserves were accumulated.

Current targetReserves Levels

Presently, targetReserves are set at 5M tokens ($5M) for USDC comets and 5k tokens ($11M) for WETH comets.

Below is a breakdown of current reserves vs targetReserves in each comet.

Comet Current Reserves (Tokens) targetReserves (Tokens) % of Target
Ethereum USDC 4,644,019 5,000,000 92.9
Polygon USDC.e 93,896 5,000,000 1.9
Arbitrum USDC (Native) 49,467 5,000,000 1.0
Base USDbC 34,109 5,000,000 0.7
Arbitrum USDC.e 29,625 5,000,000 0.6
Ethereum WETH 681 5,000 13.6
Base WETH 6 5,000 0.1

Gauntlet recently posted an update on the targetReserves parameter in the forums here, where we noted that the current reserves in the Ethereum v3 USDC comet were 82.7% of the targetReserves . Since then, the current reserves have increased to be 92.8% of the targetReserves. While our analysis indicates the comet faces minimal risk even if the current reserves were to exceed 100% of the targetReserves, we still recommend increasing the targetReserves in Ethereum v3 USDC from 5M to 20M to provide a greater buffer.

We will move forward creating a poll on the previous post to gauge community sentiment.

Next Steps

  • Target on-chain proposal 2/26/24
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The proposal has passed and been executed. We thank the community for their participation.