Initialize Compound III (WETH on Ethereum)

[pauljlei]

Hi @AndrewA - great question, some color can be found below:

USDC V3 Reserves/Interest Rate Issue

This is an intended feature of the current interest rate model; it generates reserves when above 50% utilization, and slightly churns reserves when below 50% utilization (though in a way that should, in theory, grow the market size). You can see the model in this thread from the launch of the market. It should be noted that the interest rate model is only one of two systems that can increase and decrease reserves; the liquidation process also increases and decreases reserves. In aggregate, th…