Risk Parameter Updates for 2 Assets on USDC Comet Market
01Summary
Proposal to adjust liquidation factors for 2 assets (COMP and WBTC) on the USDC Comet market on Ethereum. COMP liquidation factor increases from current level to 0.83, WBTC liquidation factor increases to 0.93. Changes are based on Gauntlet's risk parameter optimization model balancing insolvencies, liquidations, and borrow usage.
- Type
- parameter change
Key changes
- Update COMP (0xc00e94Cb662C3520282E6f5717214004A7f26888) liquidation factor to 0.83(medium)
- Update WBTC (0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599) liquidation factor to 0.93(medium)
Generated by Kvorum
02Description
Risk Parameter Updates for 2 Assets on USDC Comet Market
Simple Summary
A proposal to adjust one (1) risk parameter for two (2) Compound V3 assets.
Background
Gauntlet's simulation engine has ingested the latest market and liquidity data. These recommendations are 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.
Specification
The proposal uses the Configurator contract to configure and upgrade to a new Comet with the updated parameters.
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.
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.
03Mismatch analysis
The description states this is a routine Gauntlet risk-parameter update touching exactly one parameter across two Compound V3 assets on the USDC Comet market, implemented via the Configurator's deploy-and-upgrade pattern. The calldata shows exactly that structure: two updateAssetLiquidationFactor calls (one parameter type: liquidationFactor) targeting two distinct asset addresses on the same cometProxy (USDC market), followed by a deployAndUpgradeTo call that finalizes the Comet upgrade — this final action is explicitly mentioned in the 'Specification' section as the standard mechanism used, so it is not an omission. The description is intentionally high-level (as is typical for these recurring Gauntlet proposals) and does not state the exact numeric values or asset names, so I cannot verify the specific 83%/93% figures against a claimed number, but there is no stated value in the prose that contradicts the calldata. No target mismatches, extra actions, or missing significant actions were found. Confidence is medium rather than high because the prose omits specific asset identities and exact percentages, limiting a precise numeric cross-check, but the overall shape and count of actions align perfectly with the description's claims.
Generated by Kvorum
04Actions
- Target
- 0x316f…36e3
- Value
- 0 wei
- Function
- updateAssetLiquidationFactor(address,address,uint64)
- Arguments
{ "asset": "0xc00e94Cb662C3520282E6f5717214004A7f26888", "cometProxy": "0xc3d688B66703497DAA19211EEdff47f25384cdc3", "newLiquidationFactor": "830000000000000000" }- Calldata
- Target
- 0x316f…36e3
- Value
- 0 wei
- Function
- updateAssetLiquidationFactor(address,address,uint64)
- Arguments
{ "asset": "0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599", "cometProxy": "0xc3d688B66703497DAA19211EEdff47f25384cdc3", "newLiquidationFactor": "930000000000000000" }- Calldata
- Target
- 0x1ec6…8779
- Value
- 0 wei
- Function
- deployAndUpgradeTo(address,address)
- Arguments
{ "cometProxy": "0xc3d688B66703497DAA19211EEdff47f25384cdc3", "configuratorProxy": "0x316f9708bB98af7dA9c68C1C3b5e79039cD336E3" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- Compound V3 USDC Comet: Risk Parameter Updates 2022-12-28 ↗discourse · high confidence
- Dynamic Risk Parameters ↗discourse · high confidence
Arguments for
- Reduced liquidation factors meaningfully decrease Value at Risk (VaR) across extreme market scenarios, with COMP VaR dropping ~9% and WBTC VaR dropping ~17% according to Gauntlet's agent-based simulations.— jmo, pauljlei
- Proactive parameter adjustments now prevent potential protocol insolvency during tail market events when liquidity can evaporate rapidly, as demonstrated during past stress periods like Black Thursday.— jmo, pauljlei
- The proposed changes have no meaningful impact on capital efficiency, making them a targeted risk-reduction tool without broad user experience degradation.— jmo
Arguments against
- WBTC already has substantial on-chain liquidity (~$10M at ~1% slippage) and liquidators would likely accept a 2.5% discount given hours to execute, making the 5% incentive reduction overly conservative.— rleshner
- The proposal increases borrower liquidation penalties at a time when Compound V3 is still in its infancy and should be taking steps to encourage asset migration rather than penalizing users.— rleshner
- COMP liquidation factor was recently reduced from 7% to 12%, making a further reduction from 88% to 83% questionable without clear justification for the timing.— rleshner
Unresolved concerns
- The volatility scalar methodology used in simulations and whether extreme volatility scenarios (500%+ vol scalar) reflect realistic tail event probabilities remain unclear.— RapidsCapital, RogerS
- The causal mechanism by which higher liquidation bonuses push accounts closer to liquidation and increase cascades requires clearer empirical or behavioral evidence beyond theoretical assumptions.— RogerS
- Whether the protocol should prioritize VaR reduction via liquidation parameters versus alternative levers like StoreFrontPriceFactor adjustments that might preserve borrower experience.— rleshner, pauljlei
Notable participants
- jmoProposal author from Gauntlet presenting risk parameter recommendation with simulation-based evidence.
- pauljleiGauntlet risk manager responding to community concerns and defending simulation methodology and risk assumptions.
- rleshnerEarly critic articulating borrower user experience concerns and questioning whether WBTC reduction is necessary given existing liquidity.
- RapidsCapitalCommunity member raising technical questions about volatility scalar methodology and whether extreme scenarios are realistic.
- RogerSParticipant challenging the causal reasoning behind liquidation bonus dynamics and seeking empirical backing for behavioral assumptions.
Generated by Kvorum
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