Increase ETH Supply Cap in USDC Comet Market

Proposals
1

Simple Summary

Increase the supply cap of ETH on the USDC Comet market.

Motivation

Supply caps protect against price manipulation attacks (among other risks) on illiquid tokens that involve supplying the manipulatable token as collateral. In this framework, it is prudent to have tighter supply caps for less liquid tokens. However, despite the current market conditions, ETH’s high liquidity has not been impacted – its +2% market depth generally remains above $300M. Given the market conditions and ETH’s supply being close to its current cap on Compound III, we support doubling ETH’s supply cap to allow for organic growth in the market.

There is currently ~$95M of ETH supplied on the Comet USDC market. For reference, ~$450M of ETH is supplied on Compound V2.

Specification

  • Increase the supply cap of ETH on the Comet USDC market from 75,000 ETH to 150,000 ETH.

Next Steps

  • Welcome feedback from the community.

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5 Likes
2

Thanks @pauljlei

This has been discussed on the community call, and in Discord, and seems to have widespread support to unblock the growth of Compound III USDC.

Going forward, there is an opportunity for a CIP or process to “streamline” these mechanical adjustments.

3 Likes
3

I support this proposal from Gauntlet. My only question is, if we need to revert due to a sudden impact on ETH’s liquidity, will we be able to address such a change quickly enough to sufficiently ameliorate risk? Aave is proposing a Risk Council to handle these types of quick changes, and I think Compound should consider that as well.

1 Like