Our collaboration with Compound Finance focuses on harnessing the power of the Chainrisk simulation engine to optimize risk parameters of the Compound V3 (Comet) protocol. This report delineates a comprehensive methodology aimed at calculating key risk metrics of the protocol. This optimization framework is pivotal for mitigating systemic risks and enhancing the overall stability of the protocol. By leveraging Chainrisk’s Cloud Platform, we conduct millions of simulations to evaluate the protocol’s Value at Risk (VaR) and Liquidations at Risk (LaR), ultimately providing recommendations for parameter adjustments.
Chainrisk is proposing to onboard the Compound community into its risk and simulation platform to test Compound V3 (Comet) Modules ( Interest Rates, Collateral and Borrowing, and Liquidations Module ), and new protocol upgrades in various market scenarios.This platform will support the community in stress testing the mechanism design of the protocol and bespoke protocol research with publicly available analysis and results.
Chainrisk & Compound Finance have entered into a strategic partnership to improve the economic security of Compound V3 (Comet) markets. Compound V3 (Comet) is an EVM compatible protocol. This compatibility allows it to seamlessly integrate with the vast ecosystem of Ethereum-based applications & tools. The base asset for Compound V3 is USDC, a stablecoin that offers a stable value reference, which is crucial for borrowing & lending activities within the protocol.
The Chainrisk simulation platform is designed to replicate real-world conditions to the greatest extent possible. By forking the blockchain at specific block heights, the platform provides a realistic environment for testing protocol features & stress scenarios. This partnership aims to leverage Chainrisk's advanced simulation & risk management tools to ensure the stability & robustness of Compound's DeFi protocol.
Simulations will analyze a 53% WETH price decline over 1000 blocks in Ethereum's USDC market, which holds $1B TVL, including $440M in WETH supply (as of May 9, 2024).
This update serves as an overview of the various test scenarios planned for the Economic Risk Simulation Engine being developed for Compound v3. The simulations aim to demonstrate the engine's capabilities in modeling & predicting economic risks within the decentralized finance (DeFi) ecosystem, specifically focusing on extreme market conditions & their impact on the Compound protocol.
This update provides an overview of the recent economic audit conducted by Chainrisk on Compound V3, highlighting efforts to optimize risk management and enhance protocol stability. The audit involved stress testing the protocol under various market conditions on the Arbitrum One Chain, particularly within the USDC market. Through advanced simulations, Chainrisk aimed to identify optimal risk parameters that maintain capital efficiency while ensuring security, demonstrating the effectiveness of their risk management strategies within the decentralized finance (DeFi) ecosystem.
Add weETH as Collateral to USDT, USDC and USDS markets on Mainnet
Add Collateral deUSD & sdeUSD (staked) on USDC/USDS/USDT on Mainnet
