Risk Parameter Updates for 5 Collateral Assets
01Summary
Gauntlet proposes adjusting collateral factors (risk parameters) for 5 Compound assets to align with the community's Moderate risk level following recent market data. The changes aim to maintain protocol risk tolerance while increasing borrow usage by 8 basis points with no change in Value at Risk or Liquidations at Risk.
- Type
- parameter change
Key changes
- Collateral factor adjustment for asset at 0x39AA39c021dfbaE8faC545936693aC917d5E7563 set to 0.84(medium)
- Collateral factor adjustment for asset at 0xFAce851a4921ce59e912d19329929CE6da6EB0c7 set to 0.79(medium)
- Collateral factor adjustment for asset at 0x4B0181102A0112A2ef11AbEE5563bb4a3176c9d7 set to 0.73(medium)
- Collateral factor adjustment for asset at 0xe65cdB6479BaC1e22340E4E755fAE7E509EcD06c set to 0.73(medium)
- Collateral factor adjustment for asset at 0x80a2AE356fc9ef4305676f7a3E2Ed04e12C33946 set to 0.75(medium)
- Overall borrow usage increased by 8 basis points while maintaining Value at Risk and Liquidations at Risk levels(medium)
Generated by Kvorum
02Description
Risk Parameter Updates for 5 Collateral Assets
Simple Summary
A proposal to adjust five (5) parameters for five (5) Compound assets.
Background
Gauntlet's simulation engine has ingested the latest market and liquidity data following the recent market crash. 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 twelfth 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.
Dashboard
Gauntlet has launched the Compound Risk Dashboard. The community should use the Dashboard to understand better the updated parameter suggestions and general market risk in Compound.
Value at Risk represents the 95th percentile insolvency value that occurs from simulations we run over a range of volatilities to approximate a tail event.
Liquidations at Risk represents the 95th percentile liquidation volume that occurs from simulations we run over a range of volatilities to approximate a tail event.
These parameter changes increase borrow usage by 8 basis points with no change in Value at Risk or Liquidations at Risk.
<sup>By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.<sup>
03Mismatch analysis
The proposal describes a standard Gauntlet risk-parameter batch update affecting five Compound collateral assets, one parameter each. The decoded calldata contains exactly five _setCollateralFactor calls against the same Compound Comptroller contract, each targeting a distinct cToken address and setting a new collateral factor — this is the canonical mechanism for the type of update described (Gauntlet's recurring 'Dynamic Risk Parameters' proposals routinely adjust collateral factors). The count of actions (5) and assets (5) matches the description's explicit claim. The description does not provide a per-asset table of old/new values or asset names in the text supplied, so I cannot verify the exact magnitude of each change against the prose (e.g., whether 84% for the first asset matches a specific number claimed in the description), which limits confidence to medium rather than high. However, there is no contradiction: no target mismatch (all calls hit the same Comptroller), no extra or omitted significant actions, and the general characterization ('parameter updates … increase borrow usage by 8 basis points with no change in VaR or Liquidations at Risk') is a qualitative claim not falsifiable from calldata alone but not contradicted by it. Given the pattern strongly matches known Compound Gauntlet governance proposals of this type, I assess this as consistent with medium confidence due to the lack of granular figures in the provided description text to cross-check exact values.
Generated by Kvorum
04Actions
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x39AA39c021dfbaE8faC545936693aC917d5E7563", "1": "840000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0xFAce851a4921ce59e912d19329929CE6da6EB0c7", "1": "790000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x4B0181102A0112A2ef11AbEE5563bb4a3176c9d7", "1": "730000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0xe65cdB6479BaC1e22340E4E755fAE7E509EcD06c", "1": "730000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x80a2AE356fc9ef4305676f7a3E2Ed04e12C33946", "1": "750000000000000000" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- Risk Parameter Updates 2022-06-01 ↗discourse · high confidence
- Dynamic Risk Parameters ↗discourse · high confidence
Arguments for
- The parameter increases are justified by simulation models showing low insolvency risk (Value at Risk) and no meaningful change in liquidation risk despite higher capital efficiency.— pauljlei
- Gradual collateral factor increases are preferable to rapid changes because they avoid sudden user friction and forced liquidations.— pauljlei
- Current user positions are highly overcollateralized, providing a buffer against market turmoil and supporting safe parameter increases.— pauljlei
- The increases are consistent with the community's chosen Moderate risk level and align with the established Dynamic Risk Parameters framework.— pauljlei
- Market conditions permit reasonable increases in capital efficiency without materially changing protocol risk.— citizen42
Arguments against
- Steady decreases in overcollateralization ratios follow a pattern historically ending in failure, particularly risky during fragile global financial conditions.— Sirokko
- Collateral factors above 70% for non-core assets (SUSHI, AAVE, LINK) and above 80% for stablecoins are imprudently high given these assets lack solid monetary value backing.— Sirokko
- High collateral factors enable users to overextend themselves unsustainably, leaving them vulnerable to liquidation even if the protocol itself remains solvent.— Sirokko
Unresolved concerns
- Whether a shift from Moderate to Low risk strategy would be more appropriate given current fragile global financial conditions and upcoming quantitative tightening impacts.— Sirokko
Notable participants
- pauljleiProposal author and Gauntlet representative who provided technical justification and responded to risk concerns.
- SirokkoCommunity member who raised substantive concerns about decreasing overcollateralization trends and the prudence of high collateral factors during market fragility.
- citizen42Community member expressing support for the proposal.
Generated by Kvorum
08Similar proposals
- compoundexecutedRisk Parameter Updates for 5 Collateral Assets97%
- compoundcanceledRisk Parameter Updates for 1 Collateral Asset96%
- compoundexecutedRisk Parameter Updates for 2 Collateral Assets96%
- compoundexecutedRisk Parameter Updates for 5 Collateral Assets96%
- compoundcanceledRisk Parameter Updates for 7 Collateral Assets94%
- compoundexecutedRisk Parameter Updates for 3 Compound V2 Assets94%
- compoundexecutedRisk Parameter Updates for ETH91%
- compounddefeatedRisk Parameter Updates for ETH91%
- compoundexecutedRisk Parameter Updates for 1 Collateral Asset90%
- compoundexecutedRisk Parameter Updates for WBTC, BAT, and LINK89%