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#31
Gauntlet Risk Parameter Recommendation (6/30/2022)
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Gauntlet makes the following recommendations to optimize risk and capital efficiency for Acala and Karura:

Recommendations:

  • We recommend decreasing ACA’s liquidation ratio from 1.8 to 1.75.

  • We recommend decreasing DOT’s liquidation ratio from 1.4 to 1.35.

  • We recommend decreasing DOT’s minimum collateral ratio from 1.8 to 1.7.

  • We recommend decreasing KAR’s liquidation ratio from 1.4 to 1.35.

  • We recommend decreasing KAR’s minimum collateral ratio from 1.7 to 1.6.

  • We recommend increasing KSM’s liquidation ratio from 1.35 to 1.4.

  • We recommend increasing KSM’s minimum collateral ratio from 1.7 to 1.8.

  • We recommend increasing LKSM’s liquidation ratio from 1.75 to 1.8.

  • We recommend increasing LKSM’s minimum collateral ratio from 2.2 to 2.3.

Rationale:

Since our last recommendations, VaR has increased from $478k to $670k. All of the VaR comes from three assets: LDOT, LCDOT, and LKSM. LDOT’s VaR has increased from $66k to $203k. LCDOT’s VaR has increased from $1k to $120k. LKSM’s VaR has decreased from $411k to $348k. The other assets (KSM, KAR, DOT, ACA) all have VaR remaining at $0.

ACA, DOT, and KAR are all relatively safe from a market risk perspective, so can have their liquidation ratios gradually lowered to improve capital efficiency. LKSM and KSM are relatively more risky, so we recommend increasing their liquidation thresholds to reduce insolvency risk. LDOT and LCDOT’s liquidation thresholds are currently at an optimal balance of risk and capital efficiency.

Potential forced liquidations:

Whenever we raise liquidation thresholds, there’s a chance that some users may immediately become liquidatable as a result. As of today, for KSM, the riskiest account has a collateral ratio of 1.39, so would be liquidated by this change at today's KSM price. That user has borrowed 24.5k aUSD.

By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.

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Metadata
Proposer
Index
31
Threshold
2
Hash
0x86e6f3c569493f224dce29fb15c3b2f2eb8a2e4534088aff8468fe88ec84d5ab
Call
Table
Json
callIndex0x0300
sectionutility
methodbatch
args
calls
0
callIndex0x6802
sectioncdpEngine
methodsetCollateralParams
args
currencyId
tokenKAR
interestRatePerSecNoChange
liquidationRatio
newValue1350000000000000000
liquidationPenaltyNoChange
requiredCollateralRatio
newValue1600000000000000000
maximumTotalDebitValueNaN
1
callIndex0x6802
sectioncdpEngine
methodsetCollateralParams
args
currencyId
tokenKSM
interestRatePerSecNoChange
liquidationRatio
newValue1400000000000000000
liquidationPenaltyNoChange
requiredCollateralRatio
newValue1800000000000000000
maximumTotalDebitValueNaN
2
callIndex0x6802
sectioncdpEngine
methodsetCollateralParams
args
currencyId
tokenLKSM
interestRatePerSecNoChange
liquidationRatio
newValue1800000000000000000
liquidationPenaltyNoChange
requiredCollateralRatio
newValue2300000000000000000
maximumTotalDebitValueNaN
TimelineLatest activity undefined
2022-07-05 13:31:24
Proposed
2/2
Aye(2)
Nay(0)
2022-07-05 13:31:36
Vote
2022-07-05 13:50:06
Vote
2022-07-05 13:51:18
Closed
2022-07-05 13:51:18
Approved
2022-07-05 13:51:18
Executed
Result
Succeed
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