Simple Summary
A proposal to adjust four (4) total parameters across four (4) Compound assets.
Abstract
This proposal is a batch update of risk parameters to align with the Moderate risk level chosen by the Compound community. These parameter updates are the second of Gauntlet’s regular parameter recommendations as part of Dynamic Risk Parameters.
Motivation
This set of parameter updates seeks to level set assets to a Moderate risk level of the protocol while making risk trade-offs between specific assets. Note that some are different from the original risk level consensus check as market conditions have changed.
Specification
These recommendations build upon CP066. In CP066, recommendations included increasing Collateral Factors for LINK, MKR, SUSHI, and YFI and this set of parameter recommendations further increases Collateral Factors for these assets. With this set of updates, Compound’s Collateral Factor settings would now reach the Moderate risk level as outlined originally in the Consensus Check. We do not have plans on further gradually increasing Collateral Factors for these assets unless our simulations recommend so moving forward.
| Parameter | Current Value | Recommended Value |
|---|---|---|
| LINK Collateral Factor | 60% | 65% |
| MKR Collateral Factor | 45% | 55% |
| SUSHI Collateral Factor | 45% | 55% |
| YFI Collateral Factor | 55% | 60% |
The suppliers of these assets can borrow more against their collateral and still keep the protocol safe. See below volatility and exchange volume data from 11/04 that were important drivers for the updated parameter recommendations.
| Symbol | Volatility | Collateral Usage (USD) | Average Daily Volume (USD) |
|---|---|---|---|
| LINK | 0.87 | 7530000 | 546000000 |
| MKR | 0.91 | 804000 | 141000000 |
| SUSHI | 0.99 | 568000 | 315000000 |
| YFI | 0.81 | 631000 | 99100000 |
Next Steps
CP066 is currently active and will close voting on November 6th evening Eastern Time.
While Gauntlet expects to initiate a governance proposal for this set of parameter recommendations on November 9th, we will cancel the vote should changes in our daily simulations dictate it necessary. Should CP066 fail to pass, Gauntlet will re-poll the community on updated parameter recommendations, as this set of recommendations is intended to practically build upon CP066.