Ethereum v3 USDT Initial Asset Listing Recommendations
Simple Summary
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.
IR Curve Parameters
| IR Parameter | Value |
|---|---|
| borrow per year interest rate base | 0.015 |
| borrow per year interest rate slope low | 0.061 |
| borrow kink | 0.90 |
| borrow per year interest rate slope high | 3.2 |
| supply per year interest rate base | 0 |
| supply per year interest rate slope low | 0.059 |
| supply kink | 0.90 |
| supply per year interest rate slope high | 2.9 |
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:
- Daily COMP Supply Rewards: 70 COMP
- Daily COMP Borrow Rewards: 50 COMP
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.
Next Steps
We welcome community feedback.