KVORUM
compoundSource: Compound governor bravo · #176

[Gauntlet] 2023-08-14: Ethereum WETH - Risk Parameter, IR Curve, & Incentive Updates

executedAug 19, 2023, 04:05 PM UTCby680x683a…6c02

01Summary

AISummary by Kvorumclaude-haiku-4-5

Gauntlet proposes five parameter adjustments to Ethereum Compound v3 WETH market: increase storefront price factor to 100%, decrease wstETH and cbETH liquidation penalties to 2.5%, reduce borrow interest rate slope to 0.037, and increase COMP daily supply rewards to 70 to stimulate growth and improve capital efficiency.

Type
parameter change

Key changes

  • Increase storefront price factor from 50% to 100%(medium)
  • Decrease wstETH liquidation penalty from 5% to 2.5%(medium)
  • Decrease cbETH liquidation penalty from 5% to 2.5%(medium)
  • Decrease Annual Borrow Interest Rate Slope Low from 0.051 to 0.037(medium)
  • Increase COMP daily supply distribution from 38 to 70(medium)
Contracts0x316f9708bb98af7da9c68c1c3b5e79039cd336e30x1ec63b5883c3481134fd50d5daebc83ecd2e8779
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

188 words

[Gauntlet] 2023-08-14: Ethereum WETH - Risk Parameter, IR Curve, & Incentive Updates

Simple Summary

A proposal from Gauntlet to adjust 2 asset-specific risk parameters, 1 global risk parameter, 1 Interest Rate curve parameter, and 1 incentive parameter.

Specifically, Gauntlet recommends the following changes:

  • Increase storefront price factor from 50% to 100%
  • Decrease wstETH liquidation penalty from 5% to 2.5%.
  • Decrease cbETH liquidation penalty from 5% to 2.5%.
  • Decrease Annual Borrow Interest Rate Slope Low from 0.051 to 0.037.
  • Increase COMP daily supply distribution from 38 to 70.

For more details, see the full forum post here.

Motivation

To stimulate growth, Gauntlet proposes updating the IR borrow curve, liquidation bonus, and rewards for the protocol. These adjustments aim to increase capital efficiency and TVL growth, by incentivizing higher utilization and more supply.

Full proposal and forum discussion

Specification

The proposal uses the updateAssetLiquidationFactor, setBaseTrackingSupplySpeed, setStoreFrontPriceFactor, and setBorrowPerYearInterestRateSlopeLow methods of the Ethereum v3 WETH Configurator contract.

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

AIMismatch analysis by Kvorumclaude-sonnet-5
Consistent

I converted each on-chain fixed-point value to its human-readable equivalent and compared against the prose claims. Liquidation factor of 975e15 (0.975) correctly corresponds to a 2.5% liquidation penalty (1 - 0.975), matching the claimed decrease from 5% to 2.5% for both wstETH and cbETH. The base tracking supply speed of 810185185185 (per-second, 18 decimals) annualizes to ~70 COMP/day (70e18/86400 ≈ 810185185185), matching the claimed increase from 38 to 70. StoreFrontPriceFactor of 1e18 equals 100%, matching the claimed increase from 50% to 100%. The borrow interest rate slope low of 37e15 equals 0.037, matching the claimed decrease from 0.051 to 0.037. The final action, deployAndUpgradeTo, is the standard mechanical step required to apply Comet Configurator changes to the live proxy in Compound v3 governance proposals; it is routine boilerplate not requiring explicit mention in the description. All five substantive parameter changes align precisely with the prose after unit conversion, and no unexplained transfers, role grants, or off-target actions are present. Therefore the proposal description and calldata are consistent.

Generated by Kvorum
model: claude-sonnet-5
provider: anthropic
profile: anthropic-strong-v1
prompt: v1.0
generated: 2mo ago
Review the decoded actions ↗

04Actions

6 total
#0updateAssetLiquidationFactor(address,address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
updateAssetLiquidationFactor(address,address,uint64)
Arguments
{
  "0": "0xA17581A9E3356d9A858b789D68B4d866e593aE94",
  "1": "0xBe9895146f7AF43049ca1c1AE358B0541Ea49704",
  "2": "975000000000000000"
}
Calldata
#1updateAssetLiquidationFactor(address,address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
updateAssetLiquidationFactor(address,address,uint64)
Arguments
{
  "0": "0xA17581A9E3356d9A858b789D68B4d866e593aE94",
  "1": "0x7f39C581F595B53c5cb19bD0b3f8dA6c935E2Ca0",
  "2": "975000000000000000"
}
Calldata
#2setBaseTrackingSupplySpeed(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setBaseTrackingSupplySpeed(address,uint64)
Arguments
{
  "0": "0xA17581A9E3356d9A858b789D68B4d866e593aE94",
  "1": "810185185185"
}
Calldata
#3setStoreFrontPriceFactor(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setStoreFrontPriceFactor(address,uint64)
Arguments
{
  "0": "0xA17581A9E3356d9A858b789D68B4d866e593aE94",
  "1": "1000000000000000000"
}
Calldata
#4setBorrowPerYearInterestRateSlopeLow(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setBorrowPerYearInterestRateSlopeLow(address,uint64)
Arguments
{
  "0": "0xA17581A9E3356d9A858b789D68B4d866e593aE94",
  "1": "37000000000000000"
}
Calldata
#5deployAndUpgradeTo(address,address)chain 0x1
Target
0x1ec6…8779
Value
0 wei
Function
deployAndUpgradeTo(address,address)
Arguments
{
  "0": "0x316f9708bB98af7dA9c68C1C3b5e79039cD336E3",
  "1": "0xA17581A9E3356d9A858b789D68B4d866e593aE94"
}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total
Filter:
VoterChoice% of totalRationale
EA0xea6c…3bf7For330.9K0.00%—3y ago
8D0x8d07…a265For70K0.00%—3y ago
B40xb49f…7948For50K0.00%—3y ago
ED0xed11…bb04For50K0.00%—3y ago
B90xb933…8dd1For27.5K0.00%—3y ago
3F0x3fb1…4c8aFor25.6K0.00%—3y ago
FC0xfcb3…f1ccFor20.10.00%—3y ago
DB0xdb9e…01ffFor5.90.00%—3y ago
2A0x2a03…3eb6For50.00%—3y ago
8B0x8bc8…7276For1.10.00%—3y ago
2F0x2f2f…f78aFor10.00%—3y ago
E40xe459…e666For0.70.00%—3y ago
C60xc657…18ebAgainst0.40.00%—3y ago
090x09f2…4966For0.30.00%—3y ago
340x3496…126bFor0.30.00%—3y ago
4B0x4b93…1bb3For0.20.00%—3y ago
500x50d2…5318For0.20.00%—3y ago
E90xe972…a9daFor0.10.00%—3y ago
480x48a9…feb7For0.10.00%—3y ago
A80xa866…f628For0.10.00%—3y ago
CC0xcc3d…bbf4For00.00%—3y ago
A70xa772…6171For00.00%—3y ago
260x26fd…d4e8For00.00%—3y ago
EF0xefa8…039cFor00.00%—3y ago
Showing 24

07Forum

AIForum synthesis by Kvorumclaude-haiku-4-5
sentiment · favorablethread · constructive

Arguments for

  • Lowering the borrow interest rate curve will increase utilization by making borrowing cheaper and allow more supplied WETH to be deployed productively.— kevin, Gauntlet
  • Increasing the storefront price factor to 100% and decreasing liquidation penalty to 2.5% reduces capital risk for borrowers while maintaining liquidator compensation, enhancing protocol competitiveness.— Gauntlet
  • Raising COMP supply distribution from 38 to 70 increases supply-side APR to 1.66% to attract more suppliers and TVL growth to the Ethereum WETH comet.— Gauntlet
  • The proposed changes address stagnant utilization and growth metrics over the past three months by incentivizing both borrowing and supply activity.— Gauntlet
  • The borrow interest rate at 80% utilization (3.9%) aligns with Lido staking yields to keep recursive staking strategies profitable at full capital efficiency.— Gauntlet

Arguments against

None surfaced.

Unresolved concerns

  • LST/BASE depeg scenarios create insolvency risk; while rare and unpredictable, historical precedent (May 2022 WSTETH depeg over 10%) shows they can occur and liquidity diminishes during such events.— Gauntlet
  • Increasing COMP rewards to 70 will raise daily protocol COMP losses from $2,280 to $5,016 USD ($1.8M annually), though this is contingent on parallel reward reductions on Polygon and Arbitrum passing.— Gauntlet

Notable participants

  • GauntletProposal author; provided comprehensive risk analysis, parameter justification, and insolvency scenario modeling.
  • kevinEngaged community member who raised questions about alternative levers like capital efficiency improvements and clarified technical parameters.
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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