Simple Summary

Specification

Liquidation Penalty

Liquidation Factor

Collateral Factor

Motivation

During the market downturn on February 3, 2025, WETH and wstETH collateral remained unsold for extended periods before being liquidated. We advise that Compound introduce a strategic buffer between its Liquidation Penalty (LP) and Liquidation Factor (LF). This buffer not only safeguards users from sudden penalties but also contributes to a more robust risk management framework for Compound.

Full proposal and forum discussions can be found in this post.

Specification

The proposal updates the parameters 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