Collateralization under stress
Compound V3 (Comet)'s assessment for RD-F-068 — scored yellow on the v1.7.0 rubric. The evidence below is the curator's reasoning for this score.
Evidence summary #
No formal stress simulation performed. Qualitative: ETH-correlated collateral dominates. High LLTV for staked ETH (90% borrow CF, 93% liquidate CF). ~2.5% net liquidation incentive is thin for fast-moving cascades. Market isolation limits cross-market contagion. April 2026 rsETH event is a real-world stress case.
Detail #
Curator simulation not performed (classified PH — programmatic-hard). Collateral mix dominated by WETH, wstETH, cbETH. Under a 50% ETH price drop, positions near liquidate CF (93%) would be underwater. Thin liquidation incentive (~2.5% net on WETH) may cause liquidator hesitation during fast-moving cascades. Mitigants: (1) market isolation — cWETHv3 issues did not affect cUSDCv3; (2) reserves provide backstop; (3) governance can pause via Community MultiSig. The 2024-08-12 governance forum review indicated liquidations processed during prior downturn without documented shortfall. The April 2026 rsETH event represents a live extreme-stress demonstration.
Sources #
- URLWelfare analysis of V3 liquidationsWelfare analysis of liquidations in Compound V3 (Amin Mohazab, Dec 2025) — 217 of 790 liquidations at negative profit margin; 6.8% LTV > 1.0retrieved 2026-04-27
- Comet mainnet configurationsconfigurations: cUSDCv3 (WETH borrowCF 0.825, liquidateCF 0.895, LF 0.95); cWETHv3 (cbETH/wstETH borrowCF 0.90, liquidateCF 0.93, LF 0.95)retrieved 2026-04-27
Methodology #
Determine whether under curator-defined stress scenario (top-3 collateral assets drop 50%), protocol net collateralization falls below 110%.
See the full factor methodology and distribution across all protocols →