[GIP-6] Pool Max and Max Per Borrow Parameter Increases

[Note - snapshot has been deleted for now, official vote will occur in ~ 1 week, see here: Discord]

Current Gearbox Pool TVL Caps and Borrow Caps are still set to the conservative pre-launch parameters. The original intent of these parameters was to test in prod with lower risk - i.e. let the protocol run fully on-chain while limiting the total and individual user and protocol losses that could occur if an exploit or loss of funds were to occur.

Gearbox has been functioning for almost 2 months without incident. The initial parameters have succeeded in limiting potential losses, but with a few costs:

  1. The low individual caps means strategies that are feasible with larger amounts of capital may not be feasible or worthwhile. This means the borrowing demand is artificially capped.
  2. Lower TVL means less revenue for the DAO
  3. Liquidators are minimally incentivized due to artificially capped upside (they are taking losses on small accounts while being unable to profitably liquidate on larger accounts)

The purpose of this proposal is to expand Gearbox into the next phase of Leverage 2.0. We have numerous new integrations coming (v2 enters audit at the end of February). On one hand, new integrations mean new risk, regardless of audit status. On the other hand, if we don’t take the training wheels off to some degree, the new strategies may not be feasible to use when they are launched. For this reason as well as the reasons listed above, I propose an increase in Pool Max and Max Per Borrow for all pools.

Below are the current parameters (from Pools & APY - Gearbox Protocol)

Asset Pool Max Min Collateral Max Per Borrow
WETH 600 WETH 0.3 WETH 10 WETH
WBTC 50 WBTC 0.02 WBTC 0.8 WBTC
USDC 3M USDC 1,000 USDC 40,000 USDC
DAI 3M DAI 1,000 DAI 40,000 DAI

Below are the proposed parameters:

Asset Pool Max Min Collateral Max Per Borrow
WETH 1200 WETH 0.3 WETH 125 WETH
WBTC 100 WBTC 0.02 WBTC 10 WBTC
USDC 6M USDC 1,000 USDC 500,000 USDC
DAI 6M DAI 1,000 DAI 500,000 DAI

The changes are as follows:

  1. A 2x increase pool max values. The increase is small so as not to outpace demand for borrowing too quickly (larger pools mean lower APRs for lenders, which can create a chicken and egg lending/borrowing problem)
  2. No change to minimum collateral values. The active contributors seem largely divided on whether the time is right to increase the minimum or not. On one hand, liquidators are losing money on small accounts. On the other hand, smaller accounts mean more data and more users can test out gearbox. See discussion from here for more info: Discord. For now, these parameters are being kept the same and can be increased in a future proposal. I would encourage more DAO members to join the discussions related to the pool minimums.
  3. A 12.5x increase to individual borrow limits (up to $500k). Large-capital users tend to make up a large percentage of DeFi protocol users, and the low individual caps severely limit the value proposition of gearbox for those users. These changes should keep gearbox TVL reasonably small while enabling individuals to use gearbox more effectively. Most liquidators are utilizing flash loans as well, so larger capital liquidations should remain feasible.

Voting Options:
Vote YES - Approve the updated Pool Max and Max Per Borrow parameters.
Vote NO - Do not change any parameters (or propose alternative values)

28 Likes

Awesome. Let’s discuss today on risk and analytics call - guess we can do some research on parameters (not sure have enough time before call for that, but try to check something…)

2 Likes

I would support this move. Its not revolutionary, it simply moves us as weve grown.

Thank you for bringing it forward.

1 Like

“not revolutionary but simple” is my middle name.

…It’s caused problems in life

3 Likes

1.Increasing the threshold on min collateral values may kick speculators out, specluators could bet with 50 usdc on shitcoins to get possible huge pump on DEX,so I wonder is there any tech solution to liquidate accounts under $3k in a batch?

2.Personally,it’s just too risky to increase 12.5x on borrow limit directly,I would prefer between 3x and 10x,I think this threshold can be adjusted gradually based on historical data

We’ve got limited allowed assets list. Hopefully, no shitcoins will be in there :slight_smile:

Can you elaborate on what the direct risks are with the borrow limit increase?

I’d vote yes, this seems in the range of what we’d want to do. Don’t think a 10x vs 12.5x increase in max borrow is a huge difference.

Note snapshot has been deleted for now, official vote will occur in ~1 week: Discord

3 Likes

Let’s resurface this? After the delegation ceremony and claim, we can vote and proceed with these things. Let’s give it a couple of days for everyone to read and understand - and make a snapshot link for… Wednesday-Thursday? To me it reads just fine, thank you for the work @ov3rkoalafied <3

3 Likes

Strongly agree with this approach to advance the betterment of gearbox in a secure and safe manner. This is only the first small step, the future of gearbox is unlimited

support,I think this is a good way, we need to modify it

i will vote yes, this is a step for gearbox and community

Continuing the discussion from [PRE GIP-6] Pool Max and Max Per Borrow Parameter Increases:

Agree to approve

Maybe I think safety is the first thing, if the security problem can not be guaranteed, no amount of it is useless

This is a big step forward for our protocol. I think this is really what our community would like to have. I fully support this proposal. I will vote yes.

I think this is a good decision. I fully support this decision.
I will vote yes.

I will vote for it, it means the gearbox is growing and improving, it’s good progress, come on, gearbox

Happy to see we can finally leverage the limits after prudent discussions. Probably I will vote Yes for this.

This is a big step forward for our protocol. I think this is really what our community would like to have. I fully support this proposal. I will vote yes.