2) Earlier this week, we proposed taking the collateral factor to 65%. We thought--and still think--that it would help diversify the platform. But a number of people raised valid points.
4) For (a) the main worry is around illicit minting of WBTC. This could create a lot of fake loans on Compound.
Many proposed putting limits on the amount of WBTC on the platform, and we agree that would help. But it's a medium term goal, and unlikely to be a short term one.
5) For (b) the primary concern was that, even if BTC was liquid, it could take a day to mint WBTC--limiting the market's ability to absorb WBTC liquidations on a short timescale.
While we don't think this is the riskiest thing--unlike DAI it can be redeemed--it is a valid point.
6) On the other hand we think it's important to the growth of Compound to be able to support a large swath of the crypto ecosystem--and that means adding synthetic BTC support. A slow death is still a death, and its important to improve the product while you have the limelite.
7) Given all of these factors, we have decided to propose a compromise: adding WBTC collateral, but only with 40% weight.
We hope that this will help broaden the utility of Compound while managing the risk associated with doing so.
8) We understand this doesn't address everyone's concerns, and totally respect voting 'no' here--I think there are reasonable arguments for it!
Nonetheless we think that adding WBTC collateral is good for Compound
