Governance Weekly Recap

September 9, 2022

Summary

It’s been an eventful few weeks. The big news: Compound III was announced on August 25; the first deployment allows for the borrowing of USDC using ETH, WBTC, LINK, UNI, and COMP as collateral. The unexpected news: there were some difficulties with the Oracle upgrade. The v3 Oracle, which updated the price feed for Compound v2 and which was implemented 12 days ago with the passing of the Compound Oracle Upgrade proposal, contained an error in the code that caused the cETH market to be “temporarily frozen.” The response was fast, as you’ll see in the first two proposals described below.

Proposals

  • Oracle Update” (119). Once the oracle error was discovered, @GFXlabs quickly proposed reverting the oracle from v3 to v2. This proposal passed and “the cETH v2 markets are fully functional again.” Because of the seven-day governance process, however, there remained a risk that sudden liquidations could occur during this period due to price fluctuations.
  • Unpause Seize” (121). Before the above proposal succeeded, a proactive proposal was made by @Arr00 (working with OpenZeppelin) to allow for liquidations to be paused “to ensure that any users or downstream protocols have ample time to rebalance their positions once the price feed for cETH is restored.” As written, the proposal was meant to make sure that Compound’s Pause Guardian (which is designed to pause liquidations if certain conditions are met) can be unpaused: “This ensures that a pause action will only last ~23 hours as opposed to the usual 7-day governance process.” Since the Pause Guardian was not triggered the proposal was canceled.
  • Risk Parameter Updates for 1 Collateral Asset” (118). Gauntlet’s risk parameter update, part of their regular recommendations, was canceled pending a fix to the Oracle.
  • cETH Risk Mitigation” (122). Among other things, this proposal by @monet-supply sets a borrow cap and updates the interest-rate model in Compound v2 ahead of the Ethereum merge, which “has the potential to cause disruption to ETH lending markets.” The proposal passed with 100% voting in favor.
  • Risk Parameter Changes for FEI” (123). This proposal by Gauntlet pauses FEI borrowing and sets a high reserve factor (99%) as the “first step in winding down the FEI market,” which will be deprecated due to Tribe DAO’s entering a “terminal state.” The proposal passed with 100% voting in favor.
  • Initialize Compound III COMP Distribution” (124). Prior to this proposal, COMP distribution — which enables Compound community governance — was provided only for users of Compound v2. This proposal initiates COMP distribution to users of Compound III by re-allocating 14.17% from v2 markets (total distribution has not changed), according to the parameters specified in the proposal. This “empowers users of the new deployment, and encourages the migration of usage from Compound v2.” The proposal passed with 100% voting in favor.

:speaking_head: Meanwhile, Gauntlet is seeking community feedback through two Snapshot votes:

  • The first (which ends on September 9) aims for discussion and consensus on reserve factors in Compound v2.
  • The second (which ends on September 14) seeks consensus on rate-of-change for collateral factors, particularly with respect to “risk-off” liquidations.

In the Forums

On Twitter

In Discord

Developer Community Calls

  • Calls are held every two weeks. A recording of he last one can be found here.

:speaking_head: Join the next call on September 21 (4:30PM GMT), in Discord.

Quick Gov Links: Governance Overview | Governance Docs | Compound on Boardroom

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