A proposal to adjust one (1) parameter for one (1) Compound asset.
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 sixth of Gauntlet’s regular parameter recommendations as part of Dynamic Risk Parameters.
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.
As shown on our dashboard, these changes will slightly increase Value at Risk, but will also increase borrow usage and long-term reserves.
|Parameter||Current Value||Recommended Value|
|ETH Collateral Factor||80%||82.5%|
The increase in reserves as a result of these increases in CFs is $470K.
Results are calculated using the below user behavior assumptions in response to the CF updates. We would note that our platorm is ingesting actual on-chain elasticity and comparing it to these assumptions.
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 on our dashboard, these changes will increase Value at Risk by $59.3M (10.3%) and increase the borrow usage by 5 basis points. Note that all the VaR is projected to be liquidations that can be safely absorbed by the market.
In addition, we wanted to notify the community that we just resolved a bug with our dashboard data aggregation that attributed the liquidated amount to the borrowed assets instead of to the collateral assets. This caused the dashboard to show a different Value at Risk (VaR) distribution than intended, since the VaR calculation factors both liquidation volume and insolvencies into the calculation.
This does not affect the parameter recommendations we have delivered, and it does not affect our parameter recommendation methodology.
This bug only affected dashboard metrics and not model inputs that drive recommendations. We wanted to give this heads up that the VaR distribution on the dashboard will be different now, but the overall VaR level remains unchanged.
While Gauntlet expects to initiate a governance proposal for this set of parameter recommendations on Wednesday 12/29, we will cancel the vote should changes in our daily simulations dictate it necessary.