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#20
Gauntlet Risk Parameter Recommendations: Changes to KSM Parameters
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Gauntlet makes the following recommendations to optimize for risk and capital efficiency for Karura:

Karura Recommendations:

  • We recommend lowering the liquidation ratio for KSM from 1.35 to 1.3.
  • We recommend lowering the minimum collateral ratio for KSM from 1.7 to 1.65.

Rationale: Since Gauntlet's last recommendations, VaR has fallen from $2.5M to $1.7M. The majority of this decrease comes from KAR, which fell from $1M to $272k. The dramatic fall in KAR’s risk is driven by three causes:

  1. We raised the liquidation ratio, giving more buffer between CDPs and insolvency.
  2. The rising price of KAR has moved the collateral ratios for existing borrowers higher.
  3. The handful of liquidations that have happened have removed several of the riskiest positions.

The VaR of LKSM fell slightly from $1.5M to $1.4M. KSM’s VaR remains close to zero despite us lowering its liquidation ratio last week. Gauntlet's analysis shows that we can continue to lower its liquidation ratio to increase capital efficiency with an acceptable increase in risk.

Dashboard:

The community should use Gauntlet’s Risk Dashboard to better understand the updated parameter suggestions and general market risk in Karura.

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Metadata
Proposer
Index
20
Threshold
2
Hash
0x02379b3ff5d008807c5f06728a041cd66758eabf8f433963813fe5cdbd4ca0dc
Call
Table
Json
callIndex0x6803
sectioncdpEngine
methodsetCollateralParams
args
currencyId
tokenKSM
interestRatePerSecNoChange
liquidationRatio
newValue1300000000000000000
liquidationPenaltyNoChange
requiredCollateralRatio
newValue1650000000000000000
maximumTotalDebitValueNaN
TimelineLatest activity undefined
2022-04-04 06:21:48
Proposed
setCollateralParams
2/2
Aye(2)
Nay(0)
2022-04-04 06:25:54
Vote
2022-04-04 06:57:12
Vote
2022-04-04 06:57:30
Closed
2022-04-04 06:57:30
Approved
2022-04-04 06:57:30
Executed
Result
Succeed
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