Simple Summary
Due to governance instability within the Scroll ecosystem, Gauntlet recommends several updates to risk parameters to mitigate potential risks to the protocol:
Risk Parameters
| Status | Comet | Rate Slope Low |
|---|---|---|
| Current | Scroll USDC | 0.027777999977136 |
| Proposed | Scroll USDC | 0.0944444445 |
| Status | Comet | Collateral | Supply Cap | Collateral Factor(CF) | Liquidation Penalty(LP) |
|---|---|---|---|---|---|
| Current | Scroll USDC | WETH | 4,000 | 80% | 10% |
| Proposed | Scroll USDC | WETH | 60 | 40% | 20% |
| Current | Scroll USDC | wstETH | 1,000 | 75% | 15% |
| Proposed | Scroll USDC | wstETH | 4 | 32% | 30% |
Rationale
IR Curve
Gauntlet suggests increasing the slope of the lower segment of the IR curve to align borrowing costs with current market conditions. The current Borrow APY at the kink is 4%, and after implementing this recommendation, it will rise to 10%.
Supply Caps
We recommend lowering supply caps on Scroll markets to limit protocol exposure in the event of governance or market instability. This provides a tighter safeguard against outsized positions that could amplify risk.
Collateral Factor/Liquidation Factor/Liquidation Penalty
Gauntlet recommends reducing the collateral factor (CF) as a precautionary measure and increasing the liquidation penalty (LP) to encourage liquidators to encourage prompt liquidations.
Next Steps
- Gauntlet will monitor the Scroll ecosystem and will recommend parameter adjustments accordingly.
- We welcome community feedback.