Risk Parameter Updates for MKR and AAVE
01Summary
Proposal to adjust risk parameters for MKR and AAVE assets on Compound by setting collateral factors to 70% for both tokens, as part of Gauntlet's regular parameter recommendations aligned with the community's Moderate risk level.
- Type
- parameter change
Key changes
- Set collateral factor for MKR (0xe65cdB6479BaC1e22340E4E755fAE7E509EcD06c) to 70% (0.7)(high)
- Set collateral factor for AAVE (0x95b4eF2869eBD94BEb4eEE400a99824BF5DC325b) to 70% (0.7)(high)
Notable concerns
- These parameter changes are part of a batch update to align with Moderate risk level; actual impact depends on previous collateral factor values which are not specified in the proposal
Generated by Kvorum
02Description
Risk Parameter Updates for MKR and AAVE
Simple Summary
A proposal to adjust two (2) parameters for two (2) Compound assets.
Background
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 tenth of Gauntlet's regular parameter recommendations as part of Dynamic Risk Parameters.
Full proposal and forum discussion
Motivation and Specification
This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.
Our parameter recommendations are driven by an optimization function that balances 3 core metrics: insolvencies, liquidations, and borrow usage. Our parameter recommendations seek to optimize for this objective function. For more details, please see Gauntlet's Parameter Recommendation Methodology and Gauntlet's Model Methodology.
03Mismatch analysis
placeholder
Generated by Kvorum
04Actions
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0xe65cdB6479BaC1e22340E4E755fAE7E509EcD06c", "1": "700000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x95b4eF2869eBD94BEb4eEE400a99824BF5DC325b", "1": "700000000000000000" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- Risk Parameter Updates 2022-04-20 ↗discourse · high confidence
- Dynamic Risk Parameters ↗discourse · high confidence
Arguments for
- The parameter increases maintain the community's chosen Moderate risk level while improving capital efficiency without increasing Value at Risk according to Gauntlet simulations.— pauljlei
- Recent market downturn reports demonstrate that MKR and AAVE collaterals are resilient to insolvencies, supporting incremental CF increases.— pauljlei
- Both MKR and AAVE have low collateral concentration risk with most users holding small amounts except for isolated whale accounts that maintain adequate collateralization ratios.— pauljlei
- The parameter updates represent the tenth in a regular series of Gauntlet recommendations based on sophisticated agent-based simulations balancing insolvencies, liquidations, and borrow usage.— pauljlei
Arguments against
None surfaced.
Notable participants
- pauljleiProposal author who submitted the risk parameter update recommendation on behalf of Gauntlet with detailed analysis and methodology.
Generated by Kvorum
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