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Dharma Votes on Prop 15 & Prop 16

Dharma votes in favor of Prop 15, votes against Prop 16.

Prop 15

Title: Changing SAI Collateral Factor to 0%
Proposer: blck
Dharma Vote: Yes

SAI is the legacy cryptodollar from MakerDAO. This asset does not have the community’s attention or enthusiasm. It is being retired from nearly all systems and products that once supported it.

SAI has very limited activity on Compound, and reducing its collateral factor to zero will not result in a dangerous amount of liquidatable value. It is time.

Prop 16

Title: Set WBTC Collateral Factor to 40%
Proposer: Alameda Research
Dharma Vote: No

Prop 16 follows up on Prop 14, simply with a lower proposed Collateral Factor. As such, our rationale is basically the same as well: we still think the proposed CF is too high. We believe the CF for this asset should start around 10-20% and increase from there.

Additionally, we would be more likely to support a higher Collateral Factor for WBTC if Geoff’s concerns around compromised minters were addressed.

To be clear, the WBTC consortium was architected to mitigate concerns about compromised minting of new WBTC. For background, minting WBTC requires two actors: Minter and Custodian. The Minter submits a request to mint new WBTC, and must reference a BTC transaction in that request. The Custodian reviews the referenced BTC transaction and, if appropriate, approves the minting of the new WBTC.

This protection aside, it is clearly possible for a Minter and a Custodian to collude, so the concern is still valid, if mitigated somewhat.

This concern would be mitigated if:

1. The WBTC consortium implemented a daily limit on the number of WBTC allowed to be mined

2. The Compound Protocol implemented a daily limit on the amount of WBTC allowed to be newly used as collateral

3. Compound implemented a diversity factor requirement, disallowing a given asset from being above a certain percentage of the total collateral for a given asset market

In sum, we are supportive of giving WBTC a non-zero Collateral Factor. But we believe Prop 16 is still too high.

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