[Gauntlet] v2 deprecation (Phase 10) (2/27/24)

Simple Summary

For Phase 10 of the v2 deprecation, Gauntlet recommends the following borrow cap adjustments:

Symbol Current Borrow Cap Current Borrow Cap USD Recommended Borrow Cap Recommended Borrow Cap USD
DAI - - 80,000,000 $80 M
UNI * 700,000 $7.379 M 25,000 $0.264 M
TUSD - - 650,000 $0.650 M
USDC - - 100,000,000 $100 M
COMP * 18,000 $1.439 M 2,500 $0.200 M
ETH 100,000 $322.464 M 10,000 $32 M
USDP - - 3,000,000 $3 M
LINK * 125,000 $2.362 M 9,000 $0.170 M
USDT - - 180,000,000 $180 M
  • indicates supply for this asset is paused

Gauntlet recommends an incremental increase to reserve factors for the following assets:

Symbol Current Reserve Factor Recommended Reserve Factor
COMP 25.00% 50.00%
MKR 25.00% 50.00%
ZRX 25.00% 50.00%
YFI 25.00% 50.00%
BAT 25.00% 50.00%
AAVE 25.00% 50.00%
UNI 25.00% 50.00%
LINK 25.00% 50.00%
SUSHI 25.00% 50.00%
USDC 60% 70%

Analysis

These proposals are in line with the community’s preferences to deprecate v2 excluding both USDT & DAI. Based on the community’s preferences, we have prioritized deprecation measures that would not impact UX of users who supply or borrow DAI and USDT, until those comets are launched on v3. As a result, the deprecation measures had mild borrow caps for v2 assets, noting that total borrows for tail assets whose supplies are frozen are capped at the minimum of their borrow cap and current supply. Allowing users at least some ability to borrow these assets would help avoid abruptly driving certain users away from v2, which could have had second-order effects on DAI/USDT suppliers/borrowers that we aimed to keep in the protocol, while still allowing v2 to accumulate reserves in a manner not supported by v3.

Given V3 growth and the upcoming launch of the USDT, the community may wish to pursue more aggressive deprecation strategies for v2 including reducing borrow caps, in order to further mitigate risk and effectively reduce new borrows in order to fully deprecate v2 as more v3 comets are preparing to launch.

Table of Effective Borrow Cap (USD) vs Recommended Borrow Caps

Symbol Current Borrow Cap Current Borrow Cap USD Current Supply USD Effective Borrow Cap Recommended Borrow Cap USD Effective Borrow Capacity Change ($)
DAI - - $80.445 M $80.445 M $79.945 M -$499,492
UNI 700,000 $7.379 M $21.791 M $7.379 M $0.264 M -$7,115,850
TUSD - - $0.786 M $0.786 M $0.650 M -$136,480
USDC - - $94.872 M $94.872 M $100.000 M $0
COMP 18,000 $1.439 M $3.374 M $1.439 M $0.200 M -$1,238,778
ETH 100,000 $322.464 M $450.673 M $322.464 M $32.246 M -$290,217,508
USDP - - $5.020 M $5.020 M $3.000 M -$2,020,000
USDT - - $177.755 M $177.755 M $180.000 M $0

The recommendation provided delineates borrow limits in USD and presents the Effective Borrow Cap as determined by the max between the asset’s supply or borrow cap.

As the adoption of Ethereum USDC Comet gains momentum, per the community’s preference, we are committed to offering ongoing guidance for transitioning USDC positions to v3 market. Since February 1st, the USDC liquidity pool (LP) has been generating an impressive average of $17k in daily reserves, leading to a projected annual reserve accumulation of $6.2 million. In light of this reserve generation, the community may wish to pursue increasing the reserve factor by 10% to further encourage migrations to Comet versions. Additionally, upon the launch of the Ethereum USDT Comet, the community can discuss strategies to migrate USDT v2 users to v3.

Next Steps

We welcome community feedback and target on-chain proposal on 3/4/2024.

2 Likes

Gauntlet has submitted the proposal on-chain and voting will commence in 2 days. There are currently restrictions on the number of changes we are able to submit via governance, so Gauntlet will need to break this recommendation into 2 proposals.

We prioritized the following changes based on impact towards deprecation of v2 markets:

Symbol Current Borrow Cap Current Borrow Cap USD Recommended Borrow Cap Recommended Borrow Cap USD
DAI - - 80,000,000 $80 M
UNI * 700,000 $7.379 M 25,000 $0.264 M
TUSD - - 650,000 $0.650 M
USDC - - 100,000,000 $100 M
COMP * 18,000 $1.439 M 2,500 $0.200 M
ETH 100,000 $322.464 M 10,000 $32 M
USDP - - 3,000,000 $3 M
LINK * 125,000 $2.362 M 9,000 $0.170 M
USDT - - 180,000,000 $180 M
  • indicates supply for this asset is paused
Symbol Current Reserve Factor Recommended Reserve Factor
COMP 25.00% 50.00%
UNI 25.00% 50.00%
LINK 25.00% 50.00%
SUSHI 25.00% 50.00%
USDC 60% 70%
2 Likes

Part 1 of the v2 deprecation phase 10 proposal was executed here. We thank the community for their participation.

2 Likes

Part 2 of the v2 deprecation phase 10 proposal was executed here. We thank the community for their participation.

2 Likes