# WETH Comets Interest Rate Curve Recommendations on L2 networks
AI summary
This proposal recommends adjusting the interest rate curves for Wrapped Ether (WETH) on Compound's Comet markets across various Layer 2 networks like Base, Arbitrum, Optimism, Linea, and Unichain. The goal is to lower the borrowing costs for WETH, specifically by flattening the interest rate slope below and above the 'kink' point, which is the utilization rate where the interest rate increases more steeply. This change is motivated by recent market volatility and an exploit that impacted ETH-correlated assets, making it difficult for certain borrowing strategies.
If passed, borrowers of WETH on these Compound Comet markets will face lower interest rates, potentially reducing the risk of liquidations during volatile periods. This benefits users engaged in ETH-leverage positions and those using 'LST/LRT-based looping strategies' (strategies involving staked or liquid restaked tokens). There are no direct financial losses to any specific group, but the protocol's revenue from WETH borrowing might decrease slightly due to lower rates.
Voting results
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WETH Comets Interest Rate Curve Recommendations on L2 networks
Simple Summary
Given heightened market activity and elevated volatility across ETH markets Gauntlet recommends the following Interest Rate (IR) Curve updates across WETH comets on Ethereum. These changes are designed to keep borrow costs low and avoid liquidations during the volatile period.
Motivation
The recent Kelp exploit has led to heightened volatility and shifting dynamics across ETH-correlated assets. In this environment LST/LRT-based looping strategies are facing a significantly high negative carry. The recommen…