Risk Parameter Updates for 1 Collateral Asset on the Comet USDC Market

Simple Summary

Increase the supply cap of COMP on the Comet USDC market from 600,000 COMP to 900,000 COMP.

Motivation

Supply caps protect against price manipulation attacks (among other risks) on illiquid tokens that involve supplying the manipulatable token as collateral. In this framework, it is prudent to have tighter supply caps for less liquid tokens. On the other hand, as the use case for v3 grows, the community may wish to increase supply caps to accommodate greater usage. Current market data, including COMP’s +2% market depth at $1.7M, support an increase to the supply cap to allow for organic growth in the market without adding outsized market risk. Should the new supply cap get hit, the current liquidation bonus setting is likely to absorb the expected increase in VaR (1.5x), given the +2% market depth. Gauntlet recommends increasing the COMP supply cap to 900,000.

In the meantime, Gauntlet is continuing to formulate a formal borrow and supply cap process for Compound V3 to streamline these cap adjustments.

Specification

The proposal uses the Configurator contract to update the asset parameters listed above for cUSDCv3 using the updateAssetSupplyCap method and then upgrades cUSDCv3 to use the newly configured Comet.

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