[Gauntlet] Recommendations for sUSDS on Mainnet USDS Comet
Simple Summary
Gauntlet recommends the following risk recommendations to the protocol:
Risk Parameters
| Status | Comet | Collateral Factor (CF) | Liquidation Factor (LF) | Liquidation Penalty (LP) |
|---|---|---|---|---|
| Current | Mainnet USDS | 88% | 92% | 4% |
| Proposed | Mainnet USDS | 90% | 94% | 4% |
Rationale
- Given the low supply of sUSDS, we recommend increasing the CF and LF by 2% each, while keeping the LP at 4%. This adjustment aims to enhance capital efficiency without raising the risk of liquidation penalties. This follows from our general analysis of the Compound V3 liquidation mechanism.
| Comet | sUSDS Supply | sUSDS Total Capacity |
|---|---|---|
| Mainnet USDS | 2.81M | 53.01M |
-
Over recent months, weak user demand has been evident (see above plot). Our recommendation aims to reverse this trend and drive user demand.
-
Since an exchange rate oracle is used for pricing, we do not have any liquidity concerns where liquidations would occur. Thus, we conclude there is no need to update the liquidation penalty.
Next Steps
- We welcome community feedback.