We would like to propose on addition of USD Tether (USDT) to Compound V3.
Motivation
USDT is one of the most popular markets in Compound V2. It is the third largest Market on Compound V2 in terms of total earnings and is the largest V2 market in terms of total borrowing. Adding USDT to V3 would provide the Compound community an attractive market for borrowing and lending. Moreover, this history of demand for USDT on Compound and other protocols, makes it a desirable asset to be listed on the platform.
USDT is also one of the most widely used stablecoins in the industry. With Marketcap of $95Billion it is the third largest coin in terms of Marketcap.
Proposed Collateral
We propose adding the following assets as collaterals for the USDT market
wstETH
ETH
WBTC
COMP
USDC
We invite the community to suggest and give inputs for any other collateral assets.
Clarifying that the Milestone 1 from CGP has been met with this proposal posted on the forum. And Milestone 2 will be funded should the community vote in favour.
CGP wants to ensure alignment and transparency with the community.
Gauntlet is excited for the community to expand Compound III into USDT. We recommend the following initial parameter recommendations for the Ethereum v3 USDT comet.
Risk Parameters
Asset
Collateral Factor
Liquidation Factor
Liquidation Penalty
Supply Cap
WETH
83%
90%
5%
500,000 ($1.32B)
WBTC
80%
85%
5%
18,000 ($892M)
COMP
65%
70%
25%
100,000 ($5.8M)
wstETH
80%
85%
5%
9,000 ($30M)
UNI
75%
81%
15%
3,000,000 ($23M)
LINK
79%
85%
7%
2,000,000 ($40M)
Gauntlet provided parameter recommendations for assets listed on Ethereum v3’s USDC Comet and included wstETH, as requested in the initial proposal. We excluded USDC from our initial recommendation due to uncertainties about the market value of incorporating a fiat-backed stablecoin into the USDT Comet market. Gauntlet will provide a recommendation if the community wants to move forward with adding USDC to the Comet as collateral.
Storefront Price Factor: 60%
Gauntlet recommends keeping the storefront price factor at the same value as the Ethereum v3 USDC Comet.
Target Reserves: 20,000,000
After Gauntlet’s forum post analyzing Target Reserves, Gauntlet recommends increasing the Target Reserves for this market based on historical reserve growth and our recent recommendation to increase Ethereum USDC Comet’s Target Reserves.
The chart above demonstrates that the generation of Comet USDT reserves will be positive when utilization exceeds 72%.
Incentive Parameters
Daily COMP Supply Rewards
Daily COMP Borrow Rewards
70
50
Our COMP rewards recommendations are designed to offer appealing distribution APRs when the comet is first launched. We are incentivizing supplies and borrows to incentivize the rapid ramp-up of TVL and the high utilization of USDT. The Daily COMP rewards are subject to change as TVL rises and the markets evolve.
Here’s an update on the current COMP rewards structure in Ethereum v3 USDT:
The chart above illustrates the Distribution Annual Percentage Rates (APRs) across various supply levels, assuming a 90% utilization rate. It’s noteworthy that APRs exceeding 2% will persist until the market’s supply reaches $100M. These incentive distributions are strategically designed to accelerate the Comet’s growth on the ETH mainnet, which boasts a circulating supply of 45B USDT.
