Summary

This is a snapshot proposal for Gauntlet's Initial Recommendations for Moonwell on Base and to become Suppy/Borrow Cap Guardians. Here is a link to the forum post. Gauntlet will propose four risk recommendations in this forum regarding the Base protocol under one snapshot vote in which we will have the following options:

• Risk averse w/ Supply/Borrow Cap Guardian
• Risk tolerant w/ Supply/Borrow Cap Guardian
• Risk averse w/o Supply/Borrow Cap Guardian
• Risk tolerant w/o Supply/Borrow Cap Guardian

We have coalesced our Asset Risk tolerance and Gauntlet's Guardian proposal under one snapshot to simplify the voting process and provide clear next steps. By utilizing a cap guardian role, the community is better suited to optimize for capital efficiency and risk. Gauntlet has provided cap recs for Artemis and Apollo for 10+ months, and we are excited to continue supporting Moonwell for the BASE launch. Gauntlet recommends becoming a Supply/Borrow Cap Guardian.

Asset Recommendations

Regarding the initial listing of assets on the Base Protocol, Gauntlet presents two options for Collateral Factors to the community. Option 1 is a highly conservative approach to testing the new Base mechanics. The conservatism stems from market risk, Gauntlet's primary focus, smart contracts, and other technical risks. Initially, the collateral factor will be set to 0 for these liquidity pools, with further recommendations to follow once user positions flow into the pools. On the other hand, Option 2 is less conservative and assumes that the community is more risk tolerant, and does not require extensive testing of BASE mechanics on a new chain.

Collateral Factor Options

Option 1 (Risk Averse)

Asset	USDC	WETH	WBTC	cbETH	wstETH
Collateral Factor	0%	0%	0%	0%	0%

Option 2 (Risk Tolerant)

Asset	USDC	WETH	WBTC	cbETH	wstETH
Collateral Factor	80%	75%	70%	73%	73%

Gauntlet plans to empower the community to choose between the 2 options by submitting a snapshot for community members to decide what collateral factors to list with these liquidity pools during the initialization of the Base protocol.

General Recommendations

Regardless of the options chosen by the community, these parameter recommendations will remain applicable for all options.

Risk Parameters

Asset	USDC	WETH	WBTC	cbETH	wstETH
Liquidation Incentive	1.1	1.1	1.1	1.1	1.1
Supply Cap	40,000,000 ($40M)	10,500 ($20M)	330 ($10M)	5,000 ($10M)	3,700 ($8M)
Borrow Cap	32,000,000 ($32M)	6300 ($12M)	132 ($4M)	1500 ($3M)	1110 ($2.3M)

IR Recommendations

IR Parameters	USDC	WETH	WBTC	cbETH	wsETH
Base	0	0.02	0.02	0.01	0.01
Kink	0.8	.6	.6	.45	.45
Multiplier	0.05	0.15	0.15	0.2	0.2
Jump Multiplier	2.5	3	3	3	3
Reserve Factor	0.15	0.25	0.25	0.25	0.25

Supply & Borrow Cap Guardians Recommendation

Enable Gauntlet as Supply & Borrow Cap Guardian

To enhance risk management and promote efficient growth within the BASE protocol, Gauntlet proposes to serve as Supply and Borrow Cap Guardians, enabling the moonwell community to delegate the authority to adjust caps to our Gauntlet. Within the Moonwell technical docs, it is stated that this Cap Guardian function “is useful if you wanted to delegate the adjustment of the borrow caps across markets to someone who specializes in these sorts of adjustments without giving them administrative access across the rest of the protocol.” As a community participant specializing in these adjustments, Gauntlet recommends being added as Guardian. We seek this guardianship for the following reasons:

• Proactive Cap Adjustments: With this responsibility, we can promptly modify caps in response to market risk events, on-chain DEX liquidity fluctuations, and changes in liquidity pool usage.
• Streamlined Process: Will simplify voting overhead and operations.
• Expedited Recommendations: Gauntlet can recommend borrow and supply cap adjustments without being subject to the standard 3-day voting period and timelock, thereby increasing the speed of implementing cap changes.

If entrusted with Guardian, Gauntlet commits to adhere to the following limitations when making supply and borrow cap adjustments:

• For each asset, only 1 increase is allowed every 5 days.
• The supply cap can never be increased above 100% of the current one.
• The borrow cap can never be increased above 100% of the current one.

Furthermore, Gauntlet will ensure transparency and community engagement by notifying the community of cap changes and providing reasoning through forums.