Simple Summary
Specification
Liquidation Penalty
| Comet | Asset | Parameter | Current Value | Recommended Value |
|---|
| V3 Arbitrum USDC/USDT | WETH | Liquidation Penalty | 5% | 7% |
| V3 Optimism USDC/USDT | WETH | Liquidation Penalty | 5% | 7% |
| V3 Polygon USDC/USDT | WETH | Liquidation Penalty | 5% | 7% |
Liquidation Factor
| Comet | Asset | Parameter | Current Value | Recommended Value |
|---|
| V3 Arbitrum USDC/USDT | WETH | Liquidation Factor | 90% | 88% |
| V3 Optimism USDC/USDT | WETH | Liquidation Factor | 90% | 88% |
Collateral Factor
| Comet | Asset | Parameter | Current Value | Recommended Value |
|---|
| V3 Arbitrum USDT | WETH | Collateral Factor | 85% | 83% |
| V3 Ethereum USDS | wstETH | Collateral Factor | 82% | 80% |
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
