MGP-2 Warden Finance Risk & Tooling Proposal

On-chain vote following governance forum post and successful snapshot vote

Author: Hugo Boisselle-Morin hugo@shippooor.xyz

Summary

This proposal aims to formalize how Warden will support Moonwell in the following areas:

• Tooling and infrastructure - Support Moonwell Artemis, Apollo and Moonwell on Base chain on the Warden Finance risk & analytics platform, giving free access to advanced protocol exploration and risk tooling to the community.
• Risk management service - Governance parameters recommendations and help with onboarding Moonwell on Base chain

We have discussed this proposal with contributors from Lunar Labs. This proposal aims to create additional risk tooling for the community and further decentralize Moonwell’s risk management.

Overview

Motivation

The end goal of this proposal is to help improve the Moonwell ecosystem in the following areas: risk management, transparency and decentralization

Risk Management

Through our service and platform, we aim to improve market efficiency and have better control over risk, which we think is a clear benefit for the community. Our platform is free for everyone to use, allowing anyone in the community to run simulations, identify risk vectors and easily quantify those risks.

Transparency

The platform gives the community access to the complete picture of the Moonwell Apollo and Artemis systems through a comprehensive user experience. It also allows understanding how risk may impact one’s portfolio.

Decentralization

The tools are available to everyone for free so anyone can use them to propose risk parameter updates and measure the impact of any proposed change. Warden empowers everyone in the DeFi community to make data-driven risk decisions.

About Warden Finance

Warden helps DeFi protocols identify and manage risks. With the help of our open risk & analytics platform, we propose parameter recommendations based on our in-house research, participate in governance, and build custom risk tools.

Warden has been contributing to DeFi since 2021. So far, we have collaborated with Euler, Notional, Morpho, Compound, AAVE, Uniswap, Instadapp and Olympus helping protocols surface data in a meaningful way through an extensive set of dashboards, subgraphs and data extraction tools.

The Warden platform encompasses a set of tools for exploring DeFi accounts, running simulations, backtesting strategies and stress-testing protocols. Warden empowers everyone in the DeFi community to make data-driven risk decisions.

Implementation

Tooling and infrastructure

The Warden Finance team will take charge of implementing the Moonwell Apollo, Artemis and Base integration to the Warden Finance platform.

The team will also take care of hosting, maintenance and support for the users.

Risk management service

Monthly risk assessment reports & recommendations reviews

We will provide assessment of parameters on a monthly basis for the following parameters:

• Collateral factor
• Borrow cap
• Liquidation incentive / close factor
• Interest Rate Models (base rate, kink rate, max rate, kink utilization, reserve fees)
• Treasury (harvesting decisions & adjacent recommendations)

We will review recommendations from other contributors such as Gauntlet by assessing the output against our model, and provide adjustments if needed.

Onboarding Moonwell on Base

In order to help Moonwell with bootstrapping on Base, we will publish a full analysis providing the following recommendations:

• Suggested set of assets to be onboarded, along with an analysis of all of the risk-related metrics for each of them (oracles, volatility, slippage, dex liquidity, …)
• Recommended parameters for each of those assets

Budget, timeline & payments

Timeline: Moonwell Artemis and Apollo integrations on the Warden Finance platform will be available within 4 weeks after the proposal is accepted.

Budget: $62.5k per quarter. With the first payment paid up front to cover for initial development costs.

Period: April 2023 to April 2024 (1 year)

Payment: We are requesting a payment of $62.5K for the first quarter (April-June 2023).

The exchange rate of WELL/USD used will be the 7-day time-weighted average price (TWAP) prior to the date the proposal is submitted for the on-chain vote. The price source will be the close price of WELL published by CoinGecko. Calculations for the 7-Day TWAP can be seen through the following spreadsheet.

We will post quarterly updates on what we have delivered to the DAO and post monthly risk assessments on the Forum.