Thanks for putting forward these recommendations @gauntlet.
We support the recommendations provided with the principle of a conservative launch, given the liquidity challenges that have been outlined in the post. However, there is one area where our recommendations diverge, specifically concerning the listing of GNO.
We propose listing GNO in isolation mode, in contrast to Gauntlet’s recommendation. Our rationale includes the following points:
- Listing GNO outside of isolation mode does not fully address the risk associated with borrowing stables against GNO. It still allows users to borrow stables against GNO collateral without imposing a debt ceiling to restrict it.
- While the supply cap sets a threshold for borrowing against GNO, it does not effectively limit borrows against the asset in the event of a significant increase in its price. Setting a constant debt ceiling would be a more robust approach to managing the protocol’s exposure to borrowing against assets with a lower market cap.
- Listing GNO outside of isolation mode may introduce constraints or complications in the future when considering the inclusion of other borrowable assets in this pool.
- Importantly, listing assets outside of isolation mode is an irreversible decision. It would preclude the possibility of transitioning the asset to isolation mode in the future, even if liquidity for GNO-stable pairs were to improve.
Considering these factors, we believe that, at this stage, it would be more prudent to list GNO in isolation mode, with a conservative debt ceiling set at $1M.