Risk Parameter Updates for AAVE, LINK, MKR, SUSHI, USDC, and YFI
01Summary
Adjust collateral factors for six Compound assets (AAVE, LINK, MKR, SUSHI, USDC, YFI) to align with the community-chosen Moderate risk level. Changes range from +5% to +20% across the assets, with YFI seeing the largest increase from 35% to 55%.
- Type
- parameter change
Key changes
- AAVE collateral factor increased from 50% to 60%(medium)
- LINK collateral factor increased from 50% to 60%(medium)
- MKR collateral factor increased from 35% to 45%(medium)
- SUSHI collateral factor increased from 40% to 45%(medium)
- USDC collateral factor increased from 75% to 80%(medium)
- YFI collateral factor increased from 35% to 55%(high)
Notable concerns
- YFI collateral factor increase of 20 percentage points is significantly larger than other assets and may warrant additional risk consideration
Generated by Kvorum
02Description
Risk Parameter Updates for AAVE, LINK, MKR, SUSHI, USDC, and YFI
Simple Summary
A proposal to adjust six (6) total parameters across six (6) Compound assets.
Background
This proposal is a batch update of risk parameters to align with the Moderate risk level chosen by the Compound community. These parameter updates are the first of 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 take the first step in level setting assets to a Moderate risk level of the protocol while making risk trade-offs between specific assets.
| Parameter | Current Value | Recommended Value |
|---|---|---|
| AAVE Collateral Factor | 50% | 60% |
| LINK Collateral Factor | 50% | 60% |
| MKR Collateral Factor | 35% | 45% |
| SUSHI Collateral Factor | 40% | 45% |
| USDC Collateral Factor | 75% | 80% |
| YFI Collateral Factor | 35% | 55% |
03Mismatch analysis
I mapped each of the six decoded _setCollateralFactor calls to the corresponding cToken address (cAAVE, cLINK, cMKR, cSUSHI, cUSDC, cYFI - verified against known Compound market addresses) and converted the 18-decimal fixed-point values to percentages: 6e17=60%, 6e17=60%, 4.5e17=45%, 4.5e17=45%, 8e17=80%, 5.5e17=55%. These exactly match the 'Recommended Value' column in the proposal's table for AAVE, LINK, MKR, SUSHI, USDC, and YFI respectively. All six actions target the same Comptroller contract, consistent with a batch parameter update. No extra, missing, or mismatched values were found, and no misleading phrasing was detected - the description accurately summarizes a straightforward six-parameter collateral factor update.
Generated by Kvorum
04Actions
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0xe65cdB6479BaC1e22340E4E755fAE7E509EcD06c", "1": "600000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0xFAce851a4921ce59e912d19329929CE6da6EB0c7", "1": "600000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x95b4eF2869eBD94BEb4eEE400a99824BF5DC325b", "1": "450000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x4B0181102A0112A2ef11AbEE5563bb4a3176c9d7", "1": "450000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x39AA39c021dfbaE8faC545936693aC917d5E7563", "1": "800000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x80a2AE356fc9ef4305676f7a3E2Ed04e12C33946", "1": "550000000000000000" }- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 9A0x9aa8…ccf1 | For | 321K | 31.22% | — | 5y ago |
| 880x88fb…3981 | For | 105K | 10.22% | — | 5y ago |
| 540x54a3…e189 | For | 100.1K | 9.73% | — | 5y ago |
| 680x683a…6c02 | For | 100K | 9.73% | — | 5y ago |
| 8D0x8d07…a265 | For | 77.5K | 7.54% | — | 5y ago |
| 9B0x9b68…2984 | For | 66.1K | 6.42% | — | 5y ago |
| F60xf63e…78c8 | For | 52.6K | 5.12% | — | 5y ago |
| 470x47c1…4770 | For | 50K | 4.86% | — | 5y ago |
| 450x458c…730e | For | 50K | 4.86% | — | 5y ago |
| 070x0703…961b | For | 50K | 4.86% | — | 5y ago |
| DC0xdc1f…e432 | For | 50K | 4.86% | — | 5y ago |
| A50xa5dc…d648 | For | 3.3K | 0.32% | — | 5y ago |
| FC0xfc04…5ac2 | For | 2.3K | 0.23% | — | 5y ago |
| C80xc8a6…dffc | For | 200.2 | 0.02% | — | 5y ago |
| 910x9140…3013 | For | 30 | 0.00% | — | 5y ago |
| 060x0666…3f38 | For | 11.1 | 0.00% | — | 5y ago |
| B10xb100…73fc | For | 2.8 | 0.00% | — | 5y ago |
| 450x4504…3424 | For | 0.5 | 0.00% | — | 5y ago |
| 880x88b3…1d42 | For | 0.3 | 0.00% | — | 5y ago |
| JTjthrack.eth0x44c6…aabd | For | 0.3 | 0.00% | — | 5y ago |
| E20xe25d…2362 | For | 0 | 0.00% | — | 5y ago |
07Forum
- Dynamic Risk Parameters ↗discourse · high confidence
- Risk Parameter Updates 2021-10-25 ↗discourse · high confidence
Arguments for
- Dynamic risk parameters enable continuous optimization of protocol yield, capital efficiency, and depositor protection through data-driven simulation rather than static governance decisions.— inkymaze, rleshner, getty
- Gauntlet has demonstrated value through prior work on Compound, evidenced by successful parameter updates like Proposal 39 that prevented $7-9M in unnecessary liquidations.— inkymaze, getty, sukernik
- A dedicated risk management service is essential given Compound's scale (~$8.5B borrowed) and the potential cost of protocol failures measured in hundreds of millions or billions.— getty, sukernik, TylerEther
- The risk dashboard and transparency around VaR metrics will improve community understanding of protocol safety and parameter tradeoffs.— inkymaze, getty, RogerS
- Quarterly community polling on risk tolerance ensures governance remains involved in setting high-level risk objectives rather than delegating purely to Gauntlet.— inkymaze, RogerS
- Gauntlet's willingness to self-delegate COMP tokens and hold governance rights demonstrates alignment with protocol long-term interests.— inkymaze, allthecolors
Arguments against
- The quarterly fee of ~15k COMP annually (~$5-10M depending on token price) represents excessive dilution and cost relative to uncertain returns.— blck, sukernik, dabar90
- Paying vendors in volatile COMP rather than stablecoins introduces budget uncertainty and fails to signal actual protocol savings to tokenholders.— sukernik, blck
- Proprietary risk models and simulations cannot be audited or verified by the community, creating a black box for critical protocol decisions.— jthrack, _RP, sukernik
- The proposal lacks competitive bidding or due diligence processes; other vendors should be given a fair opportunity to compete for the work.— sukernik
- Gauntlet refuses to open-source tools or take accountability if their parameter recommendations fail to protect the protocol.— _RP, blck
Unresolved concerns
- How will Gauntlet incorporate Proposal 49's new liquidation economics and reserve growth forecasting into simulations, and what is the timeline?— rleshner, inkymaze
- Should technical risk parameter proposals be voted on by all tokenholders or delegated to a specialized Risk Committee with relevant expertise?— sukernik, dabar90
- How will Compound sustain payments to Gauntlet and other vendors as COMP emissions decline and reserves deplete over time?— blck, sukernik
- What additional risk dimensions beyond market risk—such as regulatory, governance, smart contract, and MEV risk—should Gauntlet assess?— TylerEther, dabar90
- Without third-party verification or replicable methodology, how can the community independently validate the correctness and efficacy of Gauntlet's simulation models?— jthrack
Notable participants
- inkymazeProposal lead from Gauntlet; primary respondent to community questions and technical clarifications throughout the thread.
- rleshnerCompound founder; endorsed the proposal as overdue and posed critical initial questions on metrics tracking and community inclusion in risk tolerance setting.
- gettyGauntlet team member; framed proposal as a trial period with explicit deliverables and requested detailed evidence for parameter recommendations.
- sukernikCritical supporter who raised concerns about fee structure, token dilution, stablecoin payment alternatives, and the need for expert due diligence committees.
- blckSkeptic questioning whether reserves should be preserved for safety, payment sustainability, and Gauntlet's liability if recommendations fail.
- jthrackRaised audit concerns about proprietary models and called for third-party verification of risk simulation methodology.
- _RPAdvocated for open-sourcing risk tools and frameworks to enable decentralized risk management in future years.
- RogerSProvided structured clarification of simulation inputs, outputs, and objectives to improve community understanding of Gauntlet's methodology.
- TylerEtherSupporter who called for expanded risk assessment beyond market risk to include regulatory, governance, and smart contract dimensions.
- dabar90Questioned whether average tokenholders can meaningfully evaluate complex proposals and noted the fee is expensive from protocol perspective.
Generated by Kvorum
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