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Proposal to Adjust Parameters of existing markets on FiRM

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#108 - mills ERA

Created May 10th, 2023 - Executed May 14th, 2023

Details

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Edo

Forum Link: https://forum.inverse.finance/t/proposal-to-adjust-parameters-of-existing-markets-on-firm/240

Background:

Since its launch, FiRM has been operating in “guarded mode”, initially with a single market of wrapped Ether and a limited amount of DOLA available to borrow. This approach has allowed us to carefully monitor the system and ensure that it operates flawlessly, while also assessing the potential risk and benefits of introducing new markets and collateral options. During this period, risk assessments were conducted on a variety of potential collateral assets, evaluating their technical and economic characteristics, as well as their overall suitability for the FiRM platform. What resulted from this was the launch of three additional markets; stETH, gOHM, and CRV, each deployed with carefully calibrated parameters to match their risk profiles.

As we move beyond this safeguarded period, we believe that it is time to consider parameter adjustments to the existing markets on FiRM. Our goal is to create a more appealing platform, while also ensuring that the platform remains secure for all users. To this end, we are proposing a series of enhancements to the existing markets on FiRM, including changes in collateral factors, daily borrow limits, and market supply ceilings. These changes have been carefully evaluated by our Risk Working Group, and we believe that they will help to attract new users to the platform while maintaining the overall stability and security of FiRM.

Risk Assessment:

Refer to the risk assessment document here for a summary of the qualitative and quantitative analysis performed by the Risk Working Group backing the recommended parameter changes presented in the Overview section below.

Overview:

The RWG recommends the following parameter changes to the four deployed markets on FiRM:

  • Increase collateral factors - Based on our analysis and risk assessments, we recommend increasing the collateral factors for the wETH and stETH markets to better reflect the assets' underlying risk profiles. We propose the following:
MarketCF (Old)CF (New)
wETH75%80%
stETH70%80%
gOHM75%unchanged
CRV75%unchanged
  • Increase market ceilings - We recommend increasing the market ceilings for each market to better accommodate the growing demand for borrowing. We propose the following:
MarketCeiling (Old)Ceiling (New)
wETH$1M$5M
stETH$1M$5M
gOHM$1M$5M
CRV$1M$5M
  • Adjust daily borrow limits: To that end, we recommend adjusting the daily borrow limits for each market. We propose the following:
MarketDaily Limit (Old)Daily Limit (New)
wETH$250k$500k
stETH$250k$500k
gOHM$250k$500k
CRV$250k$500k

Overall, these changes will better reflect the risk profiles of each asset, better accommodate the growing demand for borrowing, and better manage the risk of borrower default. The RWG will continue conducting updated risk assessments for each market to ensure that the collateral factors, market ceilings, daily borrow limits, and liquidation mechanisms remain appropriate and effective over time. We believe that these enhancements will help onboard the next wave of users to FiRM.

On-Chain Actions:

wETH Market

  • Set collateralFactorBps of wETH market to 8000 (80%)
  • Set FiRMwETHMarket Daily Borrow Limit to 500,000 DOLA
  • Set FiRMwETHMarket Supply Ceiling to 5,000,000 DOLA

stETH Market

  • Set collateralFactorBps of stETH market to 8000 (80%)
  • Set FiRMstETHMarket Daily Borrow Limit to 500,000 DOLA
  • Set FiRMstETHMarket Supply Ceiling to 5,000,000 DOLA

gOHM Market

  • Set FiRMgOHMMarket Daily Borrow Limit to 500,000 DOLA
  • Set FiRMgOHMMarket Supply Ceiling to 5,000,000 DOLA

CRV Market

  • Set FiRMCRVMarket Daily Borrow Limit to 500,000 DOLA
  • Set FiRMCRVMarket Supply Ceiling to 5,000,000 DOLA

FiRM

  • Set FiRM's Global Supply Ceiling to 21,000,000 DOLA

Actions

Action 1
FiRMBorrowController-v1
.setDailyLimit(
FiRMwethMarket,

500000000000000000000000

)

Action 2
FiRMstETHMarket,

500000000000000000000000

)

Action 3
FiRMgOHMMarket,

500000000000000000000000

)

Action 4
FiRMcrvMarket,

500000000000000000000000

)

Action 5
«
Set FiRMwethMarket Collateral Factor to

80%

»
FiRMwethMarket
.setCollateralFactorBps(

8000

)

Action 6
«
Set FiRMstETHMarket Collateral Factor to

80%

»
FiRMstETHMarket
.setCollateralFactorBps(

8000

)

Action 7
«
Set FiRMwethMarket Supply Ceiling to

5,000,000

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRMwethMarket,

5000000000000000000000000

)

Action 8
«
Set FiRMstETHMarket Supply Ceiling to

5,000,000

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRMstETHMarket,

5000000000000000000000000

)

Action 9
«
Set FiRMgOHMMarket Supply Ceiling to

5,000,000

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRMgOHMMarket,

5000000000000000000000000

)

Action 10
«
Set FiRMcrvMarket Supply Ceiling to

5,000,000

DOLA
»
Fed FiRM
.changeMarketCeiling(
FiRMcrvMarket,

5000000000000000000000000

)

Action 11
«
Set FiRM's Global Supply Ceiling to

21,000,000

DOLA
»
Fed FiRM
.changeSupplyCeiling(

21000000000000000000000000

)

Proof of Reviews

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