Simple Summary
Gauntlet recommends the following adjustments to the protocol:
Supply Caps
| Status | Comet | Collateral | Supply |
|---|---|---|---|
| Current | Mainnet USDT | cbBTC | 1,000 |
| Proposed | Mainnet USDT | cbBTC | 500 |
Risk Parameters
| Status | Comet | Collateral | Collateral Factor (CF) | Liquidation Factor (LF) | Liquidation Penalty (LP) |
|---|---|---|---|---|---|
| Current | Mainnet USDC | cbBTC | 80% | 85% | 5% |
| Proposed | Mainnet USDC | cbBTC | 80% | 85% | 10% |
| Current | Mainnet USDC | deUSD | 88% | 90% | 8% |
| Proposed | Mainnet USDC | deUSD | 0% | 0% | 8% |
| Current | Mainnet USDC | sdeUSD | 88% | 90% | 8% |
| Proposed | Mainnet USDC | sdeUSD | 0% | 0% | 8% |
| Current | Mainnet USDC | wstETH | 80% | 85% | 10% |
| Proposed | Mainnet USDC | wstETH | 82% | 86% | 9% |
| Current | Mainnet USDS | deUSD | 88% | 90% | 8% |
| Proposed | Mainnet USDS | deUSD | 0% | 0% | 8% |
| Current | Mainnet USDS | sdeUSD | 88% | 90% | 8% |
| Proposed | Mainnet USDS | sdeUSD | 0% | 0% | 8% |
| Current | Mainnet USDT | deUSD | 88% | 90% | 8% |
| Proposed | Mainnet USDT | deUSD | 0% | 0% | 8% |
| Current | Mainnet USDT | sdeUSD | 88% | 90% | 8% |
| Proposed | Mainnet USDT | sdeUSD | 0% | 0% | 8% |
| Current | Mainnet USDT | wstETH | 80% | 85% | 10% |
| Proposed | Mainnet USDT | wstETH | 82% | 86% | 9% |
Analysis
cbBTC collateral on Mainnet USDT demonstrated low user demand over the past 30 days, with maximum supply cap utilization consistently staying below 20%. We recommend lowering the supply caps for this market to reduce risk exposure to the protocol. Gauntlet notes that cap reductions will not affect currently open positions.
CF/LF/LP
Gauntlet recommends setting the Liquidation Penalty (LP) for cbBTC to 10% in the Ethereum USDC/USDT Comets to align the market with other Bitcoin market parameters.
Given the sunsetting of Elixir tokens, Gauntlet recommends setting Collateral Factor(CF) and Liquidation Factor(LF) to 0. Although supply caps have already been set to 0, we recommend the above updates to CF and LF out of an abundance of caution. This will prevent any further risk from these tokens impacting the aforementioned comets.
Additionally, we recommend increasing the Collateral Factor (CF) for wstETH to 82% in the Ethereum USDC/USDT Comets. This adjustment aims to stimulate market growth and attract more users to the protocol. We also recommend adjusting the LF to 86% to provide an appropriate buffer between CF and LF.
Next Steps
- We welcome community feedback.