Forum Link: https://forum.inverse.finance/t/proposal-to-add-comp-market-to-firm/436

Summary

This proposal seeks to integrate COMP as a collateral asset within FiRM, Inverse Finance’s fixed-rate lending protocol. By allowing COMP holders to use their tokens as collateral while retaining their governance rights, FiRM will attract a strategic user base that values both borrowing flexibility and participation in protocol governance. Additionally, this proposal seeks to whitelist a multisig wallet controlled by AlphaGrowth, making it eligible to borrow on FiRM.

Background

COMP, the native governance token of Compound Finance, plays a critical role in shaping the protocol’s future through community-driven governance. As one of the pioneering DeFi projects, Compound Finance has demonstrated resilience and adaptability, especially through significant market shifts and regulatory landscapes. COMP tokens enable holders to propose and vote on key protocol changes, thereby maintaining a decentralized governance model that has become a benchmark in the DeFi space.

Integrating COMP into FiRM presents a strategic opportunity for Inverse Finance. It taps into a dedicated community of Compound users who are actively involved in governance. Furthermore, by offering a unique feature where users retain their governance rights even when their COMP tokens are used as collateral, FiRM differentiates itself from other lending platforms. This approach not only enhances user engagement but also strengthens the governance propositions of both Inverse and Compound Finance.

AlphaGrowth has come forward as an interested party. They are a renowned entity in the DeFi and crypto business development space, having been around since 2018. With a track record of successful business development for multiple protocols, including Kava, Collab.Land, and Sommelier Finance, AlphaGrowth have facilitated significant increases in TVL and the deployment of numerous projects across various blockchains. By whitelisting their multisig wallet, we aim to onboard them as users and foster growth within the FiRM ecosystem.

Risk Assessment

A technical risk assessment conducted by RWG, accessible here, highlights the viability of integrating COMP into FiRM. Key considerations include:

• Governance: Compound Finance operates under a decentralized governance model facilitated by COMP tokens. This model ensures that protocol changes are community-driven, with proposals and voting conducted transparently on-chain. This decentralization aligns with FiRM’s principles and enhances the governance framework of the integrated platform.
• Oracles and Market Implementation: The Chainlink COMP/USD price feed, available on Mainnet ensures reliable and accurate price data. No advanced oracle implementation is required, leveraging Chainlink’s robust infrastructure to mitigate risks associated with price feed inaccuracies.
• Liquidity and Trading Volumes: COMP has limited on-chain liquidity but substantial off-chain liquidity, with trading volumes predominantly occurring on CEXs. The token’s trading volumes and liquidity patterns reflect a stable and engaged market, essential for maintaining collateral value and ensuring smooth market operations. Current trends indicate a strong baseline of trading activity, providing a reliable environment for the introduction of COMP collateral within FiRM.
• Security and Audits: Compound Finance has undergone multiple audits from reputable firms such as OpenZeppelin and Trail of Bits. These audits, combined with an active bug bounty program, underscore the protocol’s commitment to security and resilience. Historical incidents have been addressed transparently, with measures taken to prevent future vulnerabilities and restore value to affected users.

The RWG’s evaluation resulted in a Total Asset Score (TAS) of 5.91/10 for COMP, reflecting its strong market capitalization, equitable distribution, and moderate price volatility. While on-chain trading volumes are lower compared to other assets, the comprehensive liquidity across CEXs and the robust governance framework significantly bolster COMP’s risk profile.

Conclusion

Integrating COMP into FiRM aligns with our strategic goals of expanding our asset offerings and showcasing FiRM’s unique features. The RWG believes that COMP’s established market presence, robust governance model, and substantial liquidity make it a compelling addition to FiRM. This integration will attract a dedicated user base that values both borrowing flexibility and active participation in protocol governance.

On-Chain Actions

• Add COMP Market to DBR contract
• Set borrowController of Market to FiRM BorrowController
• Set market supply ceiling to 2,000,000 DOLA
• Set daily limit in BorrowController to 300,000 DOLA
• Set Collateral Factor to 65%
• Set Liquidation Factor to 41%
• Set Liquidation Incentive to 10%
• Approve COMP market on the DBR Helper
• Set Minimum Debt Amount in BorrowController to 3000 DOLA
• Set stalenessThreshold for COMP market to 3660
• Set FiRM Oracle price feed for COMP to the deployed Chainlink COMP/USD PriceFeed contract
• Add COMP Market to ALE
• Whitelist AlphaGrowth multisig wallet (0xc10785fB7b1adD4fD521A27d0d55c5561EEf0940)