[ARFC] Gauntlet Recommendation to re-enable CRV borrowing on v3 Ethereum/Polygon

Summary

A proposal to make parameter changes on Ethereum v3 and Polygon v3. For more details, see the full forum post here.

Motivation

During the Vyper exploit, CRV borrowing was disabled on Ethereum and Polygon v3 with the hope of mitigating downward CRV price movement in light of excess CRV positions on Aave v2.

Given that a large majority of those CRV positions with excess risk have left the system, Gauntlet recommends reactivating CRV borrowing. In order to do so, we recommend a few other changes to CRV parameterization.

Specification

Ethereum v3

• Lower supply cap from 51m → 7.5m, due to low usage.
• Lower borrow cap from 7.7m → 5m due to low usage.
• Lower debt ceiling from $5m → $1m due to low usage (current debt ceiling usage is $17k / $5m).
• Reactivate CRV borrowing.

Polygon v3

• Lower borrow cap from 900k → 300k due to low usage.
• Reactivate CRV borrowing.

Disclaimer: Gauntlet reserves the right to not move forward with any parameter changes recommended in Snapshot polls, if market conditions change meaningfully.

By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.