WETH & wstETH Comets Interest Rate Curve Recommendations on Mainnet
AI summary
This proposal suggests adjusting the interest rate curves for Wrapped Ethereum (WETH) and Wrapped Staked Ethereum (wstETH) on Compound's lending platform. The changes aim to lower borrowing costs and prevent widespread liquidations during a period of high market volatility, particularly after a recent exploit affecting ETH-related assets. The goal is to allow existing leveraged positions to unwind gradually rather than forcing rapid closures due to high interest rates.
If passed, borrowers of WETH and wstETH on Compound will face lower interest rates, especially at higher utilization levels, which could reduce the risk of liquidation for those with leveraged positions. This benefits current borrowers by making their loans cheaper and potentially more stable, while the impact on lenders is not explicitly detailed but could mean slightly lower returns on their supplied assets.
Voting results
🐳 Whale votes
0 votes > 5% VPFull proposal
WETH & wstETH Comets Interest Rate Curve Recommendations on Mainnet
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 …