Risk Parameter Updates for YFI and SUSHI
01Summary
Proposal to update collateral factors for YFI and SUSHI tokens on Compound to 70% each, aligning with the community's chosen Moderate risk level. This is the ninth regular parameter update from Gauntlet following their Dynamic Risk Parameters framework.
- Type
- parameter change
Key changes
- Set collateral factor for YFI (0x80a2AE356fc9ef4305676f7a3E2Ed04e12C33946) to 70% (700000000000000000 in wei)(high)
- Set collateral factor for SUSHI (0x4B0181102A0112A2ef11AbEE5563bb4a3176c9d7) to 70% (700000000000000000 in wei)(high)
Notable concerns
- Parameter changes are driven by optimization of insolvencies, liquidations, and borrow usage metrics
- Updates will have less than 1 basis point of increased borrow usage impact on current TVLs but aim to improve long-term capital efficiency
Generated by Kvorum
02Description
Risk Parameter Updates for YFI and SUSHI
Simple Summary
A proposal to adjust two (2) parameters for two (2) 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 ninth 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 maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.
Our parameter recommendations are driven by an optimization function that balances 3 core metrics: insolvencies, liquidations, and borrow usage. Our parameter recommendations seek to optimize for this objective function. For more details, please see Gauntlet's Parameter Recommendation Methodology and Gauntlet's Model Methodology.
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.
Value at Risk represents the 95th percentile insolvency value that occurs from simulations we run over a range of volatilities to approximate a tail event.
Liquidations at Risk represents the 95th percentile liquidation volume that occurs from simulations we run over a range of volatilities to approximate a tail event.
Even though these changes result in less than 1 bp of increased Borrow Usage given the current TVLs, they will improve long-term capital efficiency as the protocol grows and more users supply YFI and SUSHI.
03Mismatch analysis
The proposal describes a Gauntlet risk-parameter update affecting two Compound assets, consistent with two _setCollateralFactor calls in the calldata (one per market address, both setting 70% collateral factor). The description does not name specific numeric values or explicitly confirm the target addresses correspond to YFI and SUSHI cTokens, but this is typical of these recurring Gauntlet parameter-update proposals which rely on external dashboard links for details rather than embedding exact figures in the on-chain description. No conflicting numbers, targets, or extra/missing actions were found — the calldata's two _setCollateralFactor calls align with the claimed 'two parameters for two assets.' Confidence is medium rather than high because the description is a summarization without explicit percentages or addresses to cross-check precisely, but nothing in the calldata contradicts the stated intent, so this is assessed as consistent with only a minor note about missing granularity.
Discrepancies
- lowomitted in description
The description states 'two parameters' will be adjusted but never specifies the actual numeric values (e.g., the new 70% collateral factor) or explicitly names the two markets by contract address, making it impossible to fully verify the exact figures against the prose. This is a common summarization pattern for Gauntlet proposals but leaves the description light on specifics.
“A proposal to adjust two (2) parameters for two (2) Compound assets.”
Generated by Kvorum
04Actions
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x80a2AE356fc9ef4305676f7a3E2Ed04e12C33946", "1": "700000000000000000" }- Calldata
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCollateralFactor(address,uint256)
- Arguments
{ "0": "0x4B0181102A0112A2ef11AbEE5563bb4a3176c9d7", "1": "700000000000000000" }- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 880x88fb…3981 | For | 105K | 16.69% | — | 5y ago |
| 680x683a…6c02 | For | 100K | 15.89% | — | 5y ago |
| 540x54a3…e189 | For | 87.6K | 13.92% | — | 5y ago |
| A60xa6e8…eef6 | For | 75K | 11.92% | — | 5y ago |
| 8D0x8d07…a265 | For | 70K | 11.13% | — | 5y ago |
| 070x0703…961b | For | 50K | 7.94% | — | 5y ago |
| 290x29f3…666e | For | 50K | 7.94% | — | 5y ago |
| 5B0x5bc9…d76c | For | 48.3K | 7.68% | — | 5y ago |
| F60xf63e…78c8 | For | 43.3K | 6.88% | — | 5y ago |
| 910x9140…3013 | For | 30 | 0.00% | — | 5y ago |
| 660x66cd…65f9 | For | 23.1 | 0.00% | — | 5y ago |
| 840x84e3…5a95 | For | 11.5 | 0.00% | — | 5y ago |
| 450x4504…3424 | For | 4.2 | 0.00% | — | 5y ago |
| 130x13dd…36a9 | For | 0.3 | 0.00% | — | 5y ago |
| 4D0x4d47…3ad9 | For | 0.2 | 0.00% | — | 5y ago |
| 970x97d5…0815 | For | 0 | 0.00% | — | 5y ago |
07Forum
- Risk Parameter Updates 2022-03-29 ↗discourse · high confidence
- Dynamic Risk Parameters ↗discourse · high confidence
Arguments for
- Proposed 5% collateral factor increases for YFI and SUSHI will improve capital efficiency with minimal risk, supported by agent-based simulations showing low insolvency likelihood for these assets.— pauljlei
- YFI and SUSHI have demonstrated resilience during market downturns and carry low collateral locked amounts, making incremental collateral factor increases safe according to Gauntlet's simulation models.— pauljlei
- Long-term capital efficiency gains will accrue as the protocol grows and more users supply YFI and SUSHI, even though current TVL impact is less than 1 basis point.— pauljlei
Arguments against
- YFI and SUSHI represent only 0.0142% and 0.00648% of Compound total deposits respectively, making optimization efforts futile compared to focusing on major assets like ETH and USDC.— ClairvoyantLabs
- Even a 200% increase in capital utilization for YFI and SUSHI would have less impact than a 1% increase for ETH or USDC, making the governance effort disproportionate to the benefit.— ClairvoyantLabs
Unresolved concerns
- Gauntlet's parameter recommendation methodology lacks transparency, with unknown criteria allegedly driving decisions, as evidenced by the Balancer DAO's termination of their contract with Gauntlet over similar concerns.— ClairvoyantLabs
- Specific criticisms raised by Balancer DAO regarding Gauntlet's fee optimization product were not substantively addressed in the thread.— ClairvoyantLabs
Notable participants
- pauljleiProposer representing Gauntlet, explaining the rationale and methodology for the parameter updates.
- ClairvoyantLabsPrimary critic questioning the utility of optimizing small-cap assets and raising concerns about Gauntlet's methodology transparency.
Generated by Kvorum
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