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1) My proposals for updating the COMP distribution system in

Jun 27, 2020

2) Right now most of the borrowing/lending in Compound is on BAT. There's nothing _wrong_ with the BAT activity per se, but it's not poviding much value compared to liquidity in USDT/wBTC/ETH/USDC/etc. How do we move more liquidity to more important markets?

SBF

@SBF_FTX

Jun 27, 2020

3) The core problems are: a) not enough liquidity in USDT/WBTC/USDC b) $700k paid to farmers

SBF

@SBF_FTX

Jun 27, 2020

4) A lot of the problem with (a) is that USDT and wBTC can't be used as collateral. I think the single most important thing is to fix that. (b) is a big cost to the protocol and isn't justified by the BAT farming.

SBF

@SBF_FTX

Jun 27, 2020

5) So some proposals: (i) reduce COMP airdrops from 2880/day to 1k/day. COMP distributions should compensate the cost/capital/risk of providing liquidity; I think the true cost of that is closer to 1/3 of the current airdrop rate. COMP is up 300% or so; we need to adjust drops

SBF

@SBF_FTX

Jun 27, 2020

6) (ii) Make the collateral factors for USDT and wBTC 75%. They're among the most liquid things on the platform, and right now people aren't lending because they can't borrow against them. This is an easy fix.

SBF

@SBF_FTX

Jun 27, 2020

7) (iii) I think COMP should only go to lenders, not borrowers, as current constructed. COMP airdrops are proportional to borrow rate. It makes sense to incentivize people to lend things with high demand, not borrow them.

Replying to

and

Protocol works because of both borrowers and lenders. Why would you only incentivise lenders?

Replying to

I think the main problem is when borrow incentives become greater than borrow costs, as is the case now

Replying to

and

Wouldn't it make more sense to give more share (75-25 or 60-40) of COMP to lenders instead of giving 100%? And currently borrowing is costless also because of COMP's price and we're in early days of price discovery. If the price falls, won't the problem be automatically resolved?

SBF

@SBF_FTX

Replying to

@desh_saurabh

Yeah I think a less extreme version might be right--I think limiting airdrops to borrowers to 1/2 the borrow cost is my current favorite version

8:24 PM · Jun 27, 2020Twitter Web App

Replying to

and

In that case, borrowers have no incentive to borrow using compound. A dramatic success we've witnessed is probably because borrowers had an incentive. And if those incentives are taken away, borrowing may collapse (partly also because currently lenders can lever up) Thoughts?

Replying to

and

All borrowers are by definition also lenders. Subsidizing only the lenders should push borrow rates to the floor. If no natural demand emerges for near zero-cost loans, what are we all doing here anyway?

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