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#22
Gauntlet Risk Parameter Recommendation (4/13/2022)
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Gauntlet makes the following recommendations to optimize risk and capital efficiency for Karura:

Karura Recommendations:

  • We recommend lowering the liquidation ratio for KSM from 1.3 to 1.25.

Rationale: Since our last recommendations, VaR has remained at $1.7M. KAR’s VaR rose from $233k to $784k, while LKSM’s VaR fell from $1.5M to $965k. KSM’s VaR remains at ~$0. We recommend lowering the KSM liquidation ratio to improve capital efficiency, as our simulations show it to have relatively low chances of insolvency.

Although our simulations show LKSM and KAR as having relatively higher chances of insolvency, we note that the protocol plans on incentivizing greater liquidity in the aUSD-KAR and aUSD-LKSM pools. We are not recommending higher liquidation thresholds as we expect the market risk to fall as liquidity rises. Our platform will continue to ingest on-chain data to inform how market risk evolves following changes in liquidity conditions.

Dashboard:

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

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Metadata
Proposer
Index
22
Threshold
2
Hash
0xdddb1f4d6633821187036112b3402870e076cd5403cd193b9aa99f3280994446
Call
Table
Json
callIndex0x6803
sectioncdpEngine
methodsetCollateralParams
args
currencyId
tokenKSM
interestRatePerSecNoChange
liquidationRatio
newValue1250000000000000000
liquidationPenaltyNoChange
requiredCollateralRatioNoChange
maximumTotalDebitValueNaN
TimelineLatest activity undefined
2022-04-19 15:45:36
Proposed
setCollateralParams
1/2
Aye(1)
Nay(0)
2022-04-19 15:46:00
Vote
2022-04-19 16:43:12
Vote
2022-04-19 16:43:12
Closed
2022-04-19 16:43:12
Approved
2022-04-19 16:43:12
Executed
Result
Succeed
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