[Gauntlet] Scroll USDC Comet Risk Recommendations - (2024-06-18)

Simple Summary

Gauntlet recommends the following risk parameter updates for the Scroll v3 USDC comet:

  • Increase wstETH Supply Cap from 50 to 100
  • Increase WETH Supply Cap from 300 to 600


Based on user positions and the current liquidation penalty settings for wstETH and WETH collateral, Gauntlet recommends increasing the supply caps to enhance capital efficiency within the USDC Comet. Given the substantial liquidity available in on-chain decentralized exchanges, large positions can be effectively managed in the event of liquidating an unhealthy position.

Top Ten wstETH Suppliers

Top Ten WETH Suppliers

Next Steps

  • Submit on-chain proposal

Based on the usage and new points farming activity on scroll can we increase supply to:
9000 ETH
6000 wstETH

here is the scroll defi points campaign:

Plus there is loud demand in the compound community discord.

Our previous recommendations did not achieve quorum. Gauntlet will be resubmitting the risk recommendations on-chain. Since our initial proposal, the Scroll ecosystem has launched an incentive initiative called Scroll Sessions, rewarding users with Scroll Marks for active participation and engagement. These Marks are being distributed to Compound users, resulting in full supply usage within the Compound Comet. Consequently, Gauntlet will adjust their supply cap recommendations for the Scroll USDC Comet based on demand and increased liquidity:

  • Increase wstETH Supply Cap from 50 to 250
  • Increase WETH Supply Cap from 300 to 2000

Gauntlet recommends adjusting the IR curve to account for the low utilization being created via the Scroll Sessions program:

Parameter Current Recommended
Annual Borrow Interest Rate Base .015 .015
Annual Borrow Interest Rate Slope Low 0.053 0.05
Borrow Kink 0.85 0.85
Annual Borrow Interest Rate Slope High 1.80 1.80
Annual Supply Interest Rate Base 0 0
Annual Supply Interest Rate Slope Low 0.048 0.036
Supply Kink 0.85 0.85
Annual Supply Interest Rate Slope High 1.6 1.6

IR Analysis

Since its announcement on June 21st, the Comet has seen a significant decrease in utilization. Key large positions in both wstETH and WETH have no outstanding debt positions.

Gauntlet’s proposal to reduce the borrow and supply low IR slope aims to encourage increased borrowing while also decreasing the negative reserve factor to 42% utilization. Given that supply positions are relatively insensitive to APY fluctuations due to the Scroll Sessions program, Gauntlet anticipates minimal impact on supply outflows from this adjustment in the interest rate curve.

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Proposal 272 Review

OpenZeppelin confirmed that Proposal 272 is expected to execute as intended and updates the supply cap and interest rate parameters as described in the forum post and proposal description.

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