---
# System prepended metadata

title: 'MIP # Artemis Risk Parameter Recs (2023-04-12)'

---

# MIP # Artemis Risk Parameter Recs (2023-04-12)

<!--
{
	"mxcUSDT": {
		collateralFactorPercentage: 50,
		borrowCapInWholeTokens: 1,200,000
	},
	"mUSDC.wh": {
		borrowCapInWholeTokens: 2,100,000
	}
	"mDOT": {
		collateralFactorPercentage: 63,
	}
}
-->

## Artemis Summary
We recommend unpausing mint for the following markets:
- GLMR
- xcUSDT
- xcDOT
- FRAX
- ETH.wh
- BTC.wh
- USDC.wh

We recommend the following risk parameter changes:

- Decrease the xcDOT collateral factor from 64.0% to 63.0%.
- Increase the xcUSDT collateral factor from 40.0% to 50.0%.
- Increase USDC.wh borrow cap from 1,500,000 to 2,100,000.
- Increase USDT borrow cap from 1,000,000 to 1,200,000.

## Rationale:

#### Hundred finance Exploit Hack
There was an exploit to Hundred Finance, a Compound fork on the Optimism L2 over the weekend and Moonwell Pause Guardians paused supply to all Moonwell markets to protect the protocol from this novel exploit. At this current time, Gauntlet's analysis indicates that the recommended unpause assets are not at risk from this exploit.  

The VaR is $0 and our recommendations will leave it unchanged. Our recommendations will increase LaR from $481k to $514k. xcUSDT is relatively safe from a market risk perspective, so we can gradually increased its collateral factor to improve capital efficiency.

WETH.wh, WGLMR, WBTC.wh, FRAX, and USDC.wh's collateral factors are effectively balancing risk and capital efficiency. 

xcDOT can be de-risked with relatively small impact in capital efficiency, so we recommend decreasing its collateral factor to reduce overall risk. xcDOT's 25% market depth on Stellaswap is at $338k while collateral usage for xcDOT on Artemis is $2.4M. As of now, we recommend reducing the collateral factor by 100 bps in order to prevent any liquidations which might impact user experience. Further reductions are expected to be recommended in the future.

As we make recommendations through our risk models, we keep a constant check on the market liquidity and concentration risk to the Artemis protocol. In this regard, we would like to present some key liquidity figures for Artemis assets to share with the community. 

| Asset   | Moonwell Concentration Risk | Total Circulating Supply | 25% Depth | 25% Depth USD |
| ------- | ------------------ | ------------------------ | --------- | ------------- |
| ETH.wh  | 84%                | 2,006.00                 | 110       | $209,848      |
| USDC.wh | 60%                | 4,404,475.00             | 800,000   | $800,000      |
| WBTC.wh | 83%                | 147.64                   | 8         | $239,198      |
| xcUSDT  | 28%                | 1,585,145.00             | 950,000   | $950,000      |
| xcDOT   | 46%                | 1,142,702.00             | 53,000    | $338,670      |
| FRAX    | 10%                | 10,319,872.35            | 950,000   | $950,000      |


## Methodology
This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.

Gauntlet’s parameter recommendations are driven by an optimization function that balances 3 core metrics: insolvencies, liquidations, and borrow usage. Parameter recommendations seek to optimize for this objective function. Our agent-based simulations use a wide array of varied input data that changes on a daily basis (including but not limited to asset volatility, asset correlation, asset collateral usage, DEX / CEX liquidity, trading volume, expected market impact of trades, and liquidator behavior). Gauntlet’s simulations tease out complex relationships between these inputs that cannot be simply expressed as heuristics. As such, the input metrics we show below can help understand why some of the param recs have been made but should not be taken as the only reason for recommendation. To learn more about our methodologies, please see the Helpful Links section at the bottom. 

## Supporting Data

The below figures show trends on key market statistics regarding borrows and utilization that we will continue to monitor: 



### Top 10 Borrowers’ Aggregate Positions & Borrow Usages
![](https://i.imgur.com/Mqcnc9n.png)




### Top 10 Borrowers’ Entire Supply
![](https://i.imgur.com/ocdVyFx.png)




### Top 10 Borrowers’ Entire Borrows
![](https://i.imgur.com/kQMDLCF.png)








![](https://i.imgur.com/tdyWjdX.png)




![](https://i.imgur.com/UYZp6F5.png)




## Risk Dashboard
The community should use [Gauntlet’s Artemis Risk Dashboard](https://gov.gauntlet.network/artemis) to better understand the updated parameter suggestions and general market risk in Artemis. 

Value at Risk represents the 95th percentile **insolvency value** that occurs from simulations we run over a range of volatilities to approximate a tail event.

Liquidations at Risk represents the 95th percentile **liquidation volume** that occurs from simulations we run over a range of volatilities to approximate a tail event.
![](https://i.imgur.com/TyrLrjM.png)





## Quick Links

*Please click below to learn about our methodologies:*

[Gauntlet Parameter Recommendation Methodology](https://medium.com/gauntlet-networks/gauntlets-parameter-recommendation-methodology-8591478a0c1c)
[Gauntlet Model Methodology](https://medium.com/gauntlet-networks/gauntlets-model-methodology-ea150ff0bafd)

*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.*