Compound

Summary

This proposal makes changes to the cCOMP and cUNI markets. The borrow cap for cCOMP is increased from 90,750 to 150,000 COMP, and the cCOMP interest rate model is switched to the rate model currently in use for cUNI, resulting in slightly higher borrowing costs across the utilization curve. The rate model for cUNI is switched to the rate model currently in use for cAAVE/cMKR/cYFI/cSUSHI, normalizing it with other similar assets and resulting in slightly lower borrowing costs across the utilization curve.

Reasoning

Recently the v2 cCOMP market has seen high utilization, with total borrowings currently at the 90,750 COMP borrow cap. This implies that market parameters are not well optimized and some users are taking advantage of artificially compressed borrowing costs. The proposed changes will increase borrowing capacity and borrow rates, which should help the market reach a more suitable equilibrium and increase supply rates.

While the COMP borrow cap still plays an important role in protecting against governance manipulation, recent votes have shown strong participation, indicating that a moderate increase in the cap is safe.

Moving the cUNI market interest rate model to the model currently in use for other defi tokens will normalize interest rates across similar assets. This change and also allows for the possibility of making additional updates to the cCOMP interest rate curve in the future if necessary, as the cCOMP market will no longer share a common interest rate model contract with other assets.

See discussion in the forum for more details.