I’m new here so I’m not sure where this question falls under. I refer to a proposal on compound on increasing the WBTC factor to 75% (Set WBTC Collateral Factor to 75% - #8 by jmo). I noticed that, that proposal succeeded, but some reason, the cap is 65%.
I’ve followed the discussion, and noted that Gauntlet voted against that proposal, but accidentally approved it. First, can I confirm that there is no intent of following through with that proposal and increasing the collateral factor? Second, how is the community supporting operational mistakes such as accidentally approving the vote? During the attack on Coinbase oracle/DAI, that could be argued as a mistake as well, and people lost money during that attack. I’m just wondering how binding governance proposals are.
Proposal 36 (my proposal) set the collateral factor at 75%. Gauntlet voted for it when they wanted to vote against it, but since voting is binding (much like sending eth onchain) their votes counted. Proposal 39, submitted by Gauntlet, change the collateral factor to 65%.
@getty right fair enough. thanks for letting me know that it is binding. I didn’t know that the collateral factor can go down. Isn’t it pretty risky because if someone acquires a big enough voting position, they could decrease collateral factors across the board and squeeze people into liquidation? What’s stopping such an adverse outcome?
The collateral factor can be adjusted up or down via governance. I am stronger believer that the parameter should only be increased. A decrease in collateral factor should only occur under extreme circumstances.
Couldn’t agree more, though we could argue about if the conditions we saw after 36 were extreme or not for hours. Heck, I know we already have, might as well again - for old times sake?
@random Yes, someone through governance could try to do something like this - though they would need to accumulate a huge amount of the tokens to do so. It’s similar to attacks on PoS, and we provide a quantitative analysis of one of those attacks here:
It’s not apples to apples, but should cover in broad strokes why this is difficult to do. Mainly, you just have to be really long the thing for which you are creating this “adverse outcome”.
Is there even a way to quantitatively determine the odds of this? I mean all it takes is for a couple of big whales (ie Gauntlet or Rob Leshner) to vote constructively on their agenda and it would force positions into liquidation. I mean COMP’s market cap is 2/3bil? The amount locked into USDC/stable coins could already present a perverse incentive. I’m just bringing it up because I can’t think of a safeguard that would prevent this. Ideally the distribution of compound would be more uniform/diverse to prevent a situation like this.
LOLOLOL, I mean its a fair risk point right. If party X owns 60% of coin and the market cap of coin is 2bil. Let’s assume some time down the road that there is 20/30bil of FUM locked in Compound’s protocol. Then party X’s actions will be determined if benefits of attempted attack > COMP token going to 0 in such an event.
Also if Compound eventually wants to go mainstream and provide treasury services to corporate/large pension funds, then this is definitely going to be asked…
