Simple Summary
As a follow-up to our Risk Recommendations in this forum post, Gauntlet is providing the following Incentive Parameters for the USDC Native Comet Base.
Incentive Parameters
| Daily COMP Supply Rewards | Daily COMP Borrow Rewards |
|---|---|
| 20 | 8 |
Our COMP rewards recommendations are designed to offer appealing distribution APRs when the comet is first launched and when supply caps are highly utilized.
The relatively higher supply rewards incentivize a more significant inflow of supply tokens into the protocol. This is important in the early stages of protocol growth since USDC supply is required before borrowers can join. Daily COMP rewards are subject to change as TVL rises and the markets evolve.
Here’s an update on the current COMP rewards structure in BASE v3 USDC:
- Daily COMP Supply Rewards: 20 COMP
- Daily COMP Borrow Rewards: 8 COMP
Assuming full usage of supply caps and current liquidation factors, the total borrowing power would be $11.9M.
Here’s a breakdown based on our assumptions:
- Borrow Usage (60%): This leads to a borrowing volume of $7.1M.
- Utilization (90%): Corresponding to a supply volume of $13.9M.
With the above utilization and the present Interest Rate curve:
- Supply APR: 2.25%
- Borrow APR: 3.65%
Given the current COMP price of $61:
- Supply Distribution APR: 5.42%
- Borrow Distribution APR: 3.65%
This results in the following Net APRs:
- Net Supply APR: 7.67%
- Net Borrow APR: 1.24%
The current projected net APRs are within reasonable ranges. If the community believes there is still growth in the comet, we do not recommend changes to the COMP rewards on the BASE v3 USDC comet.