Stablecoin Volatility Risk Parameter Recomendations

Gauntlet Compound USDC Depeg Analysis

We recommend temporarily pausing borrows for all assets on Compound V2.

USDC supply on Compound V2 was recently paused, but existing USDC suppliers are still able to borrow against their collateral.

As seen below, the vast majority of USDC suppliers ($460M total) either recursively borrow USDC/USDT/DAI, or don’t borrow any assets.

The main way users currently utilize the V2 protocol is by borrowing stablecoins against blue chip tokens (as offered in V3), as opposed to borrowing volatile assets against USDC. As seen below, roughly 96% of borrows on V2 are stablecoins, either recursively borrowed, or mostly borrowed against assets available in V3.