Risk Parameter Updates for ETH
01Summary
Update ETH collateral factor to 82.5% as part of Gauntlet's sixth batch of dynamic risk parameter recommendations to align with the Moderate risk level chosen by the Compound community. This change is projected to increase Value at Risk by $130.9M (10.9%) and borrow usage by 5 basis points.
- Type
- parameter change
Key changes
- Set ETH collateral factor to 82.5% (0.825)(high)
Notable concerns
- Value at Risk projected to increase by $130.9M (10.9%), though Gauntlet states all projected VaR is expected to be liquidations that can be safely absorbed by the market
Generated by Kvorum
02Description
Risk Parameter Updates for ETH
Simple Summary
A proposal to adjust one (1) parameter for one (1) Compound asset.
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 sixth 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 level set assets to a Moderate risk level of the protocol while making risk trade-offs between specific assets. Note that some are different from the original risk level consensus check as market conditions have changed.
Dashboard
Gauntlet has launched the Compound Risk Dashboard. The community should use the Dashboard to better understand the updated parameter suggestions and general market risk in Compound.
As shown on our dashboard, these changes will increase Value at Risk by $130.9M (10.9%) and increase the borrow usage by 5 basis points. We would emphasize that all the VaR is projected to be liquidations that can be safely absorbed by the market.
03Mismatch analysis
The description states this is a single-parameter update for a single Compound asset (ETH), consistent with the decoded calldata which contains exactly one action: a `_setCollateralFactor` call targeting what corresponds to the cETH cToken address, setting collateral factor to 82.5% (825000000000000000 in 18-decimal fixed point). The count of actions (1) and asset (ETH) match the prose exactly. The specific numeric risk parameter value and VaR impact figures cited in the description are illustrated via external dashboard images that cannot be independently verified against the calldata, so I cannot confirm whether 82.5% is the exact figure Gauntlet recommended, but there is no textual claim in the description that contradicts the calldata value, and the type of parameter (collateral factor) is a standard Compound risk parameter consistent with Gauntlet's routine recommendations. No extra actions, missing actions, or target mismatches were found. Given the general structural match and lack of any explicit numeric claim in the prose to contradict, I assess this as consistent, with medium confidence due to reliance on unverifiable image content for the precise numeric target value.
Generated by Kvorum
04Actions
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x4Ddc2D193948926D02f9B1fE9e1daa0718270ED5", "1": "825000000000000000" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- Risk Parameter Updates 2022-01-07 ↗discourse · high confidence
- Dynamic Risk Parameters ↗discourse · high confidence
Arguments for
- The proposal aligns ETH collateral factor with the Moderate risk level consensus established by the community and represents Gauntlet's regular parameter recommendations under Dynamic Risk Parameters.— pauljlei
- The parameter increase will boost borrow usage and long-term protocol reserves by approximately $423k while remaining safe even in extreme market stress scenarios like Black Thursday.— pauljlei
Arguments against
- The change lacks sufficient supporting evidence and clarity on methodology, with VaR figures appearing inconsistent across recent proposals (jumping from $574m to $1.2B).— GFXlabs
- VaR as presented is conceptually confusing—if liquidations can be safely absorbed, the metric does not represent true value at risk and needs better definition before the market can assess safety.— GFXlabs
Unresolved concerns
- What is the maximum amount of liquidations that the market can actually absorb, and how does Compound's exposure relate to that threshold?— GFXlabs
- The Dashboard remains overly minimal and barebones; terms like VAR, Market Statistics, and Sim Statistics lack clear in-app explanations with mathematical definitions that would help average users understand the proposal.— RogerS
- Why did the reported VaR jump significantly between the December 23rd update ($574m) and the current proposal ($1.2B), and what changed in the methodology or assumptions?— GFXlabs
Notable participants
- pauljleiProposal author and Gauntlet representative defending the parameter change and committing to improved dashboard documentation and a January 28th VaR explanation post.
- GFXlabsSkeptical delegate raising critical questions about VaR methodology, inconsistent figures, and lack of evidence supporting the collateral factor increase.
- RogerSUser feedback advocate emphasizing the need for clearer in-app documentation and more intuitive dashboard design beyond forum post explanations.
Generated by Kvorum
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