Governance Proposal: Deployment of Compound III on Sonic

[cmrn]

Thanks @bryancolligan for the context, @Sudipan_Chainrisk for the further analysis, and @YJN21 for bringing the proposal. It wasn’t to be and that’s ok. Now looking forward

[mexilc]

I think Compound should deploy on Sonic, growth will probably be big there. Agree?

[Gauntlet]

[Gauntlet] - Sonic Recommendations

Simple Summary

Given the recent rise in DEX liquidity on Sonic, Gauntlet would like to share updated recommendations for the assets in the following comets:

Risk Parameters

USDC.e Comet

Asset	Collateral Factor	Liquidation Factor	Liquidation Penalty	Supply Cap
SONIC	70%	75%	20%	20M SONIC
stS	65%	70%	25%	20M stS

USDT Comet

Asset	Collateral Factor	Liquidation Factor	Liquidation Penalty	Supply Cap
SONIC	70%	75%	20%	3.8M SONIC
stS	65%	70%	25%	3.7M stS

SONIC Comet

Asset	Collateral Factor	Liquidation Factor	Liquidation Penalty	Supply Cap
stS	80%	85%	10%	31M stS

Rationale

S/USDC.e DEX Slippage

stS/USDC.e DEX Slippage

S/USDT DEX Slippage

stS/USDT DEX Slippage

stS/S DEX Slippage

The recent incentive program on Sonic has had trickle down effects on the DEX TVL providing deeper liquidity for the above collateral-borrow pairs. We recommend setting the supply caps to the levels suggested above. Given the improved liquidity against USDT pairs, we also recommend listing the USDT comet with CF, LF and LP parameters matching that of USDC.e comet.

IR curves

We recommend aligning the IR curves for USDT and USDC.e comet to that proposed in the most recent IR curve recommendations.

USDT Comet

Targetted Reserves: 20M
Storefront price factor: 60%
Seed Reserves: 50k USDT

Our COMP rewards recommendations are designed to offer appealing distribution APRs when the comets are first launched and when supply caps are highly utilized.

Gauntlet is recommending supply rewards to incentivize a more significant inflow of supply tokens into the protocol. This is important in the early stages of protocol growth before borrowers can join. Daily COMP rewards are subject to change as TVL rises and the markets evolve.

Daily COMP Supply Rewards	Daily COMP Borrow Rewards
3	2

With the above utilization and the present Interest Rate curve, for USDT comets:

• Supply APR: 4.25%
• Borrow APR: 5.25%

Given the current COMP price of $41 at 90% utilization:

• Supply Distribution APR: 2.8%
• Borrow Distribution APR: 2.06%

This results in the following Net APRs:

• Net Supply APR: 7.04%
• Net Borrow APR: 3.19%

[YJN21]

Thank you for the analysis @Gauntlet. Unfortunately we do not wish to go ahead with the proposal due to how to it has played out and the massive delays that were faced.

Governance Proposal: Deployment of Compound III on Sonic

After a thorough evaluation of the proposal to deploy Compound III on the Sonic Mainnet, Sonic has decided not to proceed with this integration at this time. This decision is based on several key considerations: 1. Risk Parameter Constraints: The recommended risk parameters from Gauntlet, such as collateral factors and liquidation penalties are extremely conservative in spite of the current liquidity landscape which has significantly improved. For instance, the suggested supply caps of $S and $…

Governance Proposal: Deployment of Compound III on Sonic

Thank you @Sudipan_Chainrisk for your response. Unfortunately due to how this has played out, our stance remains the same as we do not wish to go ahead with Compound III on Sonic

Sonic is a permissionless L1 and Compound III is always welcome to deploy with the updated parameters but our stance is firm and Sonic Labs will not be providing liquidity or incentives.

[sharp]

Thank you @Gauntlet for the Recommendations.

The Compound Growth Program has decided to move forward with deployment of Compound V3 on Sonic Mainnet. This is a rational conclusion we reached, given the fact that Four service providers (OpenZeppelin, AlphaGrowth, Gauntlet and Woof!) had already dedicated considerable resources towards the achievement of this goal. When this announcement from the Sonic team first came out, Woof! team was a day away from completing the code.

It is to be noted that Sonic’s announcement came as a surprise without any prior warnings or communications. The announcement also had a very accurate timing with their Aave Partnership.

In all of the interactions we had with Chains, including Mantle, Arbitrum, Optimism, Never had a team backtracked on their commitments even when there were no written, legally enforceable clauses. A sort of Gentleman’s agreement was implied whenever we had interacted with Chains and to their credit, most of the Chains kept their word. Most of the Chains until Sonic team broke the Code.

But on the bright side, it will be a good learning experiment to see the deployment of Compound on Sonic. All of our deployments (Optimism, Mantle, Unichain, Linea) came with a bilateral collaboration with Chains. This will be our first unilateral deployment on a chain and while chances are high that the deployment does not perform like other deployments, we may discover some novel means to grow the Compound Markets on Sonic.

We are still grateful to @YJN21 and the entire Sonic team that we pushed in this direction. We’ll keep learning and improving.

[franzns]

Thank you for the revised market parameters.

We are very excited that Compound has decided to deploy to Sonic!

We are also very happy that Beets Staked Sonic (stS) has secured Chainlink oracles in the meantime: Exchange Rate stS/S and Market Rate stS/USD

Beets Staked Sonic has shown continued growth over the past weeks, with almost 210M S staked. We are looking forward to our collaboration on Sonic.