KVORUM
compoundSource: Compound governor bravo · #226

[Gauntlet] USDC Comets - Interest Rate Curve & Reward Recommendations (3/11/24)

executedMar 17, 2024, 01:35 PM UTCby680x683a…6c02

01Summary

AISummary by Kvorumclaude-haiku-4-5

Gauntlet proposes adjusting interest rate curves and COMP incentive rewards for USDC Comet markets on Ethereum, Arbitrum, and Polygon to improve capital efficiency. On Ethereum, interest rate parameters are being updated. On Arbitrum and Polygon, daily COMP supply and borrow rewards are being reduced (Arbitrum: 20→17 supply, 20→8 borrow; Polygon: 34.7→16 supply, 34.7→7 borrow).

Type
parameter change

Key changes

  • Update Ethereum USDC Comet interest rate curve parameters including borrow kink (0.9), borrow base rate (1.5%), borrow slope low (8.33%), borrow slope high (4.3%), supply kink (0.9), supply slope low (7.5%), and supply slope high (3.6%)(high)
  • Reduce Arbitrum USDC Comet daily COMP supply rewards from 20 to 17 tokens and daily borrow rewards from 20 to 8 tokens(high)
  • Reduce Polygon USDC Comet daily COMP supply rewards from 34.7 to 16 tokens and daily borrow rewards from 34.7 to 7 tokens(high)
  • Deploy and upgrade Configurator contract on Ethereum and execute cross-chain message to update Polygon and Arbitrum markets(medium)

Notable concerns

  • Significant reduction in COMP incentive rewards on Arbitrum (60% supply, 60% borrow) and Polygon (54% supply, 80% borrow) may impact user participation
  • Changes affect mature markets with established user bases
Contracts0xc3d688B66703497DAA19211EEdff47f25384cdc30x316f9708bb98af7da9c68c1c3b5e79039cd336e30x1ec63b5883c3481134fd50d5daebc83ecd2e8779
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

324 words

[Gauntlet] USDC Comets - Interest Rate Curve & Reward Recommendations (3/11/24)

Simple Summary

A proposal from Gauntlet to adjust IR Curves and Incentives to v3 Comets USDC Ethereum, USDC Arbitrum, and USDC Polygon.

We recommend the following Incentives to v3 Comets USDC Arbitrum, and USDC Polygon:

MarketsDaily COMP Supply Rewards (Tokens)Daily COMP Borrow Rewards (Tokens)Recommended Daily COMP Supply Rewards (Tokens)Recommended Daily COMP Borrow Rewards (Tokens)
Compound III USDC (Arbitrum)2020178
Compound III USDC (Polygon)34.734.7167

We recommend the following IR curves to v3 Comets USDC Ethereum, USDC Arbitrum, and USDC Polygon:

ParameterRecommended Value
Annual Supply Interest Rate Base0
Annual Supply Interest Rate Slope Low.075
Supply Kink.9
Annual Supply Interest Rate Slope High3.6
Annual Borrow Interest Rate Base.015
Annual Borrow Interest Rate Slope Low.0833
Borrow Kink.9
Annual Borrow Interest Rate Slope High4.3

For more details, see the full forum post here.

Motivation

Given the rising demand for USDC borrowing and the maturity of existing USDC comets, Gauntlet proposes updating the IR borrow curves and incentives to increase capital efficiency. Full proposal and forum discussion

Specification

The proposal updates the base tracking borrow and supply speeds, the supply/borrow kink, the borrow/supply per year interest rate high slope, the borrow/supply per year interest rate low slope and the supply/borrow interest rate base by using the respective methods on 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

10 total
#0setBorrowKink(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setBorrowKink(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "900000000000000000"
}
Calldata
#1setBorrowPerYearInterestRateBase(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setBorrowPerYearInterestRateBase(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "15000000000000000"
}
Calldata
#2setBorrowPerYearInterestRateSlopeLow(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setBorrowPerYearInterestRateSlopeLow(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "83300000000000000"
}
Calldata
#3setBorrowPerYearInterestRateSlopeHigh(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setBorrowPerYearInterestRateSlopeHigh(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "4300000000000000000"
}
Calldata
#4setSupplyKink(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setSupplyKink(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "900000000000000000"
}
Calldata
#5setSupplyPerYearInterestRateSlopeLow(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setSupplyPerYearInterestRateSlopeLow(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "75000000000000000"
}
Calldata
#6setSupplyPerYearInterestRateSlopeHigh(address,uint64)chain 0x1
Target
0x316f…36e3
Value
0 wei
Function
setSupplyPerYearInterestRateSlopeHigh(address,uint64)
Arguments
{
  "0": "0xc3d688B66703497DAA19211EEdff47f25384cdc3",
  "1": "3600000000000000000"
}
Calldata
#7deployAndUpgradeTo(address,address)chain 0x1
Target
0x1ec6…8779
Value
0 wei
Function
deployAndUpgradeTo(address,address)
Arguments
{
  "0": "0x316f9708bB98af7dA9c68C1C3b5e79039cD336E3",
  "1": "0xc3d688B66703497DAA19211EEdff47f25384cdc3"
}
Calldata
#8sendMessageToChild(address,bytes)chain 0x1
Target
0xfe5e…89a2
Value
0 wei
Function
sendMessageToChild(address,bytes)
Arguments
{
  "0": "0x18281dfC4d00905DA1aaA6731414EABa843c468A",
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}
Calldata
#9createRetryableTicket(address,uint256,uint256,address,address,uint256,uint256,bytes)chain 0x1
Target
0x4dbd…ab3f
Value
10129527000000000 wei
Function
createRetryableTicket(address,uint256,uint256,address,address,uint256,uint256,bytes)
Arguments
{
  "0": "0x42480C37B249e33aABaf4c22B20235656bd38068",
  "1": "0",
  "2": "4350410000000000",
  "3": "0x3fB4d38ea7EC20D91917c09591490Eeda38Cf88A",
  "4": "0x3fB4d38ea7EC20D91917c09591490Eeda38Cf88A",
  "5": "11558234",
  "6": "500000000",
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}
Calldata

05Tally

Summed from votes

Voters14
VP participating501.5K
Outcome (current)For
Current support100%

06Voters

14 total

No votes recorded yet.

07Forum

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

Arguments for

  • Reducing COMP rewards on mature USDC comets achieves significant protocol savings ($7.3M annually) while maintaining attractive incentive structures across markets.— Gauntlet
  • Implementing a 90% kink in the IR curve with higher borrow APR (9% at kink, >50% at 100% utilization) aligns with elevated USDC borrowing demand and prevents liquidity crunches.— Gauntlet
  • Incremental approach to rate adjustments respects governance efficiency and community preference for gradual changes rather than drastic modifications.— Gauntlet

Arguments against

  • Excluding Arbitrum USDC from reward reductions contradicts the DAO's goal of attracting liquidity to underserved markets, especially given Arbitrum's extremely low liquidity.— cmrn

Unresolved concerns

  • Whether the original 7% borrow APR target and 5.04% supply APR were appropriately calibrated before the subsequent increase to 9% borrow APR and 6.75% supply APR.— tempail
  • Why prioritizing IR curve adjustments and reward reductions to achieve gradual market maturation takes precedence over aggressive efforts to attract liquidity in underserved markets like Arbitrum.— cmrn
  • Uncertainty about whether elevated USDC borrowing demand driving the updated IR recommendations will persist or prove transient.— Gauntlet

Notable participants

  • GauntletProposer who submitted and updated USDC reward and IR curve recommendations based on market conditions.
  • cmrnCommunity member who raised substantive questions about reward reductions' impact on liquidity attraction in Arbitrum and requested clarification on priorities.
  • tempailCommunity participant who requested explanation of the original APR targets.
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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