Simple Summary
A proposal to adjust three (3) total parameters across three (3) 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 fourth 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
As shown on our dashboard, these changes will slightly increase Value at Risk, but the corresponding increase in borrow usage is substantial.
| Parameter | Current Value | Recommended Value |
|---|---|---|
| WBTC Collateral Factor | 65% | 70% |
| UNI Collateral Factor | 60% | 70% |
| COMP Collateral Factor | 60% | 65% |
The increase in reserves as a result of these increases in CFs is $413k, broken down as follows:
Results are calculated using the below user behavior assumptions in response to the CF updates. We would note that we are monitoring actual on-chain elasticity and comparing it to these assumptions.
Dashboard
Gauntlet has launched the Compound Risk Dashboard. The community should use the Dashboard to better understand the updated parameter suggestions and general market risk in Compound.
As shown below, this set of parameter updates will slightly increase VaR, but meaningfully increase borrow usage.
Next Steps
While Gauntlet expects to initiate a governance proposal for this set of parameter recommendations today, we will cancel the vote should changes in our daily simulations dictate it necessary.
