KVORUM
compoundSource: Compound governor bravo · #207

[Gauntlet] 2023-12-15: Arbitrum v3 USDC Native, Arbitrum v3 USDC.e, & Base v3 USDbC - Interest Rate Curve Recommendations

executedDec 21, 2023, 09:42 AM UTCby7B0x7b3c…cc33

01Summary

AISummary by Kvorumclaude-haiku-4-5

Gauntlet proposes adjusting interest rate curve parameters across three Compound v3 markets (Arbitrum USDC Native, Arbitrum USDC.e, and Base USDbC) to increase borrow and supply rates, raise kinks from 0.8 to 0.85, and increase rate slopes to respond to sustained high utilization and ensure positive reserve growth.

Type
parameter change

Key changes

  • Raise Annual Borrow Interest Rate Slope Low from 0.035 to 0.053(medium)
  • Raise Borrow Kink from 0.8 to 0.85(medium)
  • Raise Annual Borrow Interest Rate Slope High from 0.25 to 1.8(high)
  • Raise Annual Supply Interest Rate Slope Low from 0.0325 to 0.048(medium)
  • Raise Supply Kink from 0.8 to 0.85(medium)
  • Raise Annual Supply Interest Rate Slope High from 0.4 to 1.6(high)

Notable concerns

  • Interest rate increases may reduce borrowing demand
  • Changes applied simultaneously across three markets increase implementation risk
Contracts0x0a5edbdd9646f8dff606d7448e414884c7d905dca0x9c4ec768c28520b50860ea7a15bd7213a9ff58bf
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

238 words

[Gauntlet] 2023-12-15: Arbitrum v3 USDC Native, Arbitrum v3 USDC.e, & Base v3 USDbC - Interest Rate Curve Recommendations

Simple Summary

A proposal from Gauntlet to adjust six Interest Rate (IR) Curve parameters in each of the Arbitrum v3 USDC Native, Arbitrum v3 USDC.e, & Base v3 USDbC comets.

Gauntlet recommends the following IR Curve updates in each comet:

  • Raise Annual Borrow Interest Rate Slope Low from 0.035 to 0.053
  • Raise Borrow Kink from 0.8 to 0.85
  • Raise Annual Borrow Interest Rate Slope High from 0.25 to 1.8
  • Raise Annual Supply Interest Rate Slope Low from 0.0325 to 0.048
  • Raise Supply Kink from 0.8 to 0.85
  • Raise Annual Supply Interest Rate Slope High from 0.4 to 1.6

For more details, see the full forum post here.

Motivation

Gauntlet recommends adjusting the Arbitrum v3 USDC Native, Arbitrum v3 USDC.e, and Base v3 USDbC Interest Rate (IR) Curves with four main objectives:

  1. Raise Borrow APR and Supply APR rates at the kink due to sustained high utilization
  2. Increase the kinks
  3. Ensure positive reserve growth beyond the kink
  4. Increase the rate caps

Full proposal and forum discussion

Specification

The proposal updates the IR curve parameters by using the respective methods in the Configurator.

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 Kvorum

A calldata-vs-description analysis is not generated yet. Review the decoded actions →

04Actions

2 total
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Target
0x4dbd…ab3f
Value
12265181000000000 wei
Function
createRetryableTicket(address,uint256,uint256,address,address,uint256,uint256,bytes)
Arguments
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Calldata
#1sendMessage(address,bytes,uint32)chain 0x1
Target
0x866e…0afa
Value
0 wei
Function
sendMessage(address,bytes,uint32)
Arguments
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Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total

No votes recorded yet.

07Forum

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

Arguments for

  • Current USDC utilization is sustained above the 80% kink with recent peaks at 100% on Arbitrum and 90% on Base, indicating strong borrowing demand justifies higher rates.— Gauntlet
  • Raising APRs at the kink to 4.08% supply and 6.00% borrow aligns with market conditions including treasury yields above 5% and increased DeFi stablecoin borrowing demand.— Gauntlet
  • Increasing the kink to 85% provides more pre-kink USDC liquidity while higher post-kink slopes protect suppliers from liquidity crunches during high utilization periods.— Gauntlet
  • Adjusting slopes to ensure positive reserve growth even beyond 85% utilization aligns the protocol's evolved growth phase with profitability prioritization.— Gauntlet
  • The proposal requires expedited passage due to urgent insolvency risk if adjustments are not implemented quickly.— CallasFiche

Arguments against

None surfaced.

Notable participants

  • GauntletProposal author providing complete technical analysis and rationale for interest rate curve adjustments.
  • CallasFicheCommunity member expressing urgency around the proposal citing imminent insolvency risk.
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Open the thread ↗