DeFi lender Compound to set borrow caps on 10 crypto collateral assets
Compound will enforce loan limits on 10 crypto tokens in its version 2 protocol at the end of November, thus reducing the amount of the affected collateral that users can borrow.
This is a different kind of domino-effect - a cascade of caution!
Look at all those coins with "no limit" borrowing caps!? Then they wonder why their naive protocols can't cope with sudden large loans.
This decision is based on a governance vote concluded on Monday. The governance vote was on a proposal submitted by DeFi risk management protocol Gauntlet to the Compound DAO. Gauntlet’s proposal called for Compound to set borrow caps on certain collateral assets. This move, Gauntlet explained, was to adjust the risk parameters of Compound v2.
Worth looking at this discussion regarding Dynamic Risk Parameters. I do get annoyed with the clueless decentral-crowd - the road to mass stupidity is paved with naive intentions. I hope Defi shrugs off this shit before it implodes the whole sector.
I mean, let's look at something this simple. What lender is going to have "no limits" on any coin? So, we stop being naive by implementing some checks, some limits, some intelligent protocols that manage risks and greed. Those will necessarily be experimental and go through some iterations until they appear to function properly. THEN, after this period, one can look at how the algorithms work, how the parameters work, and whether such parameters can themselves be turned into algorithms - and then the consequences of such changes. THEN one can start to minimise centralising influences and, perhaps, become more decentralised. But to set such a goal at the very start is to risk implosion through malicious governance.
Indeed, if "decentralisation" is to work at all, it isn't just from centralising influences but also from mass stupidity. Especially as stupidity strikes me as a very powerful centralising influence.
For an example, look back at the mass LUNA cheerleaders before it crash landed!
Brilliant! Same as those who promote democracy = the weakest form of gov and prone to control by collusion by stealth.