Proposal To Upgrade To UAV V3

Proposals
11

Hi Compound Community,

The Chainlink Labs team is pleased to announce that we have successfully deployed the UniswapAnchoredView (UAV) V3 using the latest UAV configurations!

UniswapAnchoredView Contract

To recap, the update from Uniswap V2 to Uniswap V3 pools is crucial because V2’s liquidity continues to drop as liquidity providers migrate to V3. Compound’s UAV Oracle must follow this shift to provide a highly reliable and highly-secure price feed.

Below is the summary of the changes:

In addition, we’ve also increased the Uniswap observation cardinality to 150 on pools that were below 150. To elaborate, the “cardinality” in Uniswap is a term for the TWAP lookback history. It represents the state changes per block, so ten trades in a block get condensed and recorded as one update in the lookback. To save on gas costs, the cardinality starts at 2, and anyone can pay the gas cost for a deeper lookback. Therefore, increasing the cardinality to 150 ensures a safe minimum for the lookback history.

Uniswap V3 Liquidity Pools - As of Aug 5

Listed below are the Uniswap V3 pools and liquidity levels for each price feed in the UAV3. Note that it is required to reference the ETH-paired pools specifically:

  • ETH: $185M - 0x88e6a0c2ddd26feeb64f039a2c41296fcb3f5640
  • DAI: $19M - 0xc2e9f25be6257c210d7adf0d4cd6e3e881ba25f8
  • USDC: N/A
  • USDT: N/A
  • TUSD: N/A
  • WBTC: $244M - 0xcbcdf9626bc03e24f779434178a73a0b4bad62ed
  • BAT: $827K - 0xae614a7a56cb79c04df2aeba6f5dab80a39ca78e
  • ZRX: $928K - 0x14424eeecbff345b38187d0b8b749e56faa68539
  • REPv2: $30.5K - 0xb055103b7633b61518cd806d95beeb2d4cd217e7
  • SAI: N/A
  • UNI: $16.2M - 0x1d42064fc4beb5f8aaf85f4617ae8b3b5b8bd801
  • COMP: $4.3M - 0xea4ba4ce14fdd287f380b55419b1c5b6c3f22ab6
  • LINK: $8.1M - 0xa6cc3c2531fdaa6ae1a3ca84c2855806728693e8
  • AAVE: $3.9M - 0x5ab53ee1d50eef2c1dd3d5402789cd27bb52c1bb
  • SUSHI: $56.5K - 0x73a6a761fe483ba19debb8f56ac5bbf14c0cdad1
  • MKR: $11.8M - 0xe8c6c9227491c0a8156a0106a0204d881bb7e531
  • YFI: $178.5K - 0x04916039b1f59d9745bf6e0a21f191d1e0a84287
  • FEI: $233 - 0x2028D7Ef0223C45caDBF05E13F1823c1228012BF

We note that low liquidity in Uniswap v3 pools makes the TWAP price in those pools easier to manipulate. That may cause the Uniswap anchor to be less accurate than expected. However, this will not affect the accuracy of the primary price feed from Chainlink.

Next Steps

If the Compound community supports this upgrade, the following are the recommended next steps to proceed with this proposal:

  1. The Compound community will signal support using the above Uniswap V3 pools for the current UAV3 deployment.
  2. If supported, Chainlink Labs will configure all existing validator proxies to push prices to the new UAV candidate while continually pushing to the existing one. This is so that Compound voters can see the new UAV working as it should while the current UAV maintains full operation.
  3. Lastly, if the vote is passed and executed on-chain, The Comptroller will point to UAV V3 and use it for prices. At this stage, Chainlink will decommission UAV V2 by setting the ValidatorProxies to only point to the new one.
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