Gauntlet Risk Management Dashboard, Coinbase Earn COMP Update, Governance Updates
Compound Digest - November 12, 2021
Gauntlet Risk Management Dashboard
The Gauntlet team recently launched the full version of the Compound Risk Management Dashboard as a part of their ongoing initiative to optimize yield, capital efficiency, and mitigate depositor losses on the Compound protocol. The dashboard shows the data and rationale behind Gauntlet’s dynamic risk parameters and contains the following sections:
Gauntlet Top Recommendations: Shows suggested changes to help optimize Capital Efficiency and Value at Risk.
Value At Risk: Shows capital at risk due to insolvencies and liquidations when markets are under duress, broken down by collateral type.
Borrow Usage: Shows the percentage of borrowing power that borrowers are currently utilizing.
Collateral Risk: Shows the risk for each collateral type in Compound.
The Gauntlet team is looking for community feedback on the dashboard, so feel free to add your comments to the forum thread or through the “Send Feedback” button on the interface.
Coinbase Earn COMP Update
In September of 2020, the Compound Labs Team provided an update on the distribution of COMP tokens to the community, which included up to 500,000 COMP designated to Coinbase Earn. The Coinbase Earn program walked users through the process of supplying USDC to Compound and rewarded them with COMP for learning about the basic protocol mechanics. More than 5 million people learned about the Compound protocol through these videos and a Coinbase Wallet onboarding lesson.
The Earn program has since concluded, and Coinbase has transferred 114,100 COMP, 5,426 ETH, and 1,319,371 USDC to the Timelock. The community can use these assets to fund other initiatives that advance governance and benefit the Compound ecosystem.
Since the last newsletter, Proposal 66 passed through the governance system with broad community support, Proposal 67 failed, Proposal 68 is queued, and Proposal 69 is in the active voting stage.
Status: Active 2 days, 7 hrs left
Voting Results: 0 For and 0 Against
Summary: Proposal 69 increases the collateral factors of the following markets: LINK from 60% to 65%, MKR from 45% to 55%, SUSHI from 45% to 55%, and YFI from 55% to 60%. The increased capital efficiency for these markets follows the Moderate Risk Level selected by the Compound community, and is an ongoing task of the Gauntlet team as a part of the Dynamic Risk Parameters initiative. More information is available on the original forum thread.
Status: Queued November 10th, 2021
Voting Results: 749,593 For and 0 Against
Summary: Proposal 68 ends COMP rewards for borrowers in the cCOMP market. The combination of the $28.95M borrowing cap and rewards distribution in the cCOMP market has created a negative borrowing rate, and prevented the market from reaching equilibrium. Ending these rewards will create a positive borrowing rate and allow the market to return to a healthy state. COMP rewards will remain the same for suppliers of this market. On the forum thread, community members are also discussing removing or raising the cCOMP borrowing cap.
Status: Failed November 8th, 2021
Proposer: Tyler Lowen
Voting Results: 121,013 For and 279,499 Against
Summary: Rather than changing or upgrading the protocol, Proposal 68 is the first use of the governance system to hold a vote. The proposal asked the community for their feedback on whether COMP tokens should be distributed to early users before further work is done on the distribution mechanics. This discussion has been active for the past year, with proponents arguing that retroactive COMP rewards would further decentralize the protocol and reward early users, and opponents arguing that the tokens in the treasury should only be used for future incentives.
Status: Executed November 9th, 2021
Voting Results: 1,028,127 For and 0 Against
Summary: Proposal 66 increases the collateral factors of the following markets: AAVE from 50% to 60%, LINK from 50% to 60%, MKR from 35% to 45%, SUSHI from 40% to 45%, USDC from 75% to 80%, and YFI from 35% to 55%. The increased capital efficiency for these markets follows the Moderate Risk Level selected by the Compound community, and is an ongoing task of the Gauntlet team as a part of the Dynamic Risk Parameters initiative. The change to the USDC market also marks the first time in the protocol’s history that an asset has a collateral factor greater than 75%. More information is available on the original forum thread.
See below for highlights from the Compound Community Forum, and join in the discussion:
Bug Bounty Program for Compound Proposals - @Rk2357 suggests a bug bounty program for new governance proposals once they enter the timelock stage.
VC engagement and inducting new members into governance - @tgmed addresses new expectations for VC/Founder’s participation in governance and rewarding early protocol users through grants.
Auditing Compound Protocol - @OZSecure from OpenZeppelin shares their proposal to implement new security solutions for the Compound Community.
Reentrancy protection currently broken - @dvf raises the concern that the reentrancy bug which allowed for C.R.E.A.M’s most recent hack may also be present in cToken contracts.
Remove cCOMP borrow cap - @arr00 reintroduces the idea of removing the cCOMP borrow cap.
Continuous Formal Verification - @shelly from Certora discusses a proposal for continuous formal verification of the Compound protocol.
Be sure to either vote on proposals with your COMP, or delegate your COMP voting rights to a representative of your choice.
As a reminder, one of the best ways to participate in, and contribute to, the Compound ecosystem is to complete outstanding Request For Proposals (RFPs). The Compound Grants Program is offering substantial grants to individuals and organizations who work on the topics listed below. Have an idea in mind that's not included on the list? Feel free to apply with your own ideas here!
RFP 1: Decentralized batching contract | $25k
RFP 2: Voting with COMP collateral | $50k
RFP 3: Bringing Compound to L2's and other chains | $50k
RFP 4: Adding support for new assets on Compound | $12.5k
RFP 5: Gas optimizations | TBD
RFP 6: Improvements to the liquidations process | $50k
RFP 7: Uniswap V3 management platforms as collateral | $25k
RFP 8: Balancer V2 liquidity as collateral | $25k
RFP 9: Open source Compound Interface | $50k
RFP 10: Ripcord wallet | TBD
RFP 11: Governance/Voters rewards | TBD
RFP 12: cToken Cleanup | $250k
RFP 13: cToken Interest Rate Model Changes | $100k
RFP 14: Gas Savings for cToken and Comptroller contracts | $100k
RFP 15: Dynamic COMP reward distribution | $100k
RFP 16: Migrate legacy cTokens | $50k
RFP 17: Deploy upgradeable cETH contract and migrate users to it | $50k
RFP 18: Uniswap V3 liquidity as collateral | $100k
RFP 19: Interest rate curve research | $5k
RFP 20: Optimism Starport for Compound Gateway | $100k
Developer Community Call Recap
Current supply on Compound is at $19.8B from 297k unique addresses. 33% of this supply volume is ETH, 22% is DAI, and 18% is USDC. (source).
Open borrowing is at $7.7B from 9.2k unique addresses. 46% of this borrowing volume is DAI, 38% is USDC, and 8% is USDT. (source).
For live figures please refer to our Markets page.
Image Source: IntoTheBlock
Links & Discussions
Messari shares their State of Compound Q3 2021 report, which analyzes the macro and micro trends for the protocol over the last three months.
Ripple hosts Robert Leshner for a discussion on institutions’ current usage and future adoption of decentralized finance
Adam Bavosa updated the developer guide for borrowing assets from the Compound protocol.
Dune Analytics’ creator Supernova created a dashboard delving into some of the protocol’s key metrics such as aggregate LTV and borrowers by address age.
Tweet of the Week
Maartje Bus @maartjebus1/ @MessariCrypto just offered a glimpse into the future of financial reporting. If you are interested in becoming a protocol CFO, read on for key takeaways from the @compoundfinance Q3 Analyst Call featuring @rleshner @RyanWatkins_ and @twobitidiot. https://t.co/OjKb9V921s 👇