As mentioned in our response provided here and as detailed in the original proposal, enabling wGHO as collateral to facilitate the borrowing of other stablecoins can contribute to maintaining the GHO peg.
We acknowledge the potential risk stemming from liquidity and price manipulation attacks, especially considering GHO’s short history and limited liquidity, as illustrated in the aforementioned theoretical scenario. While these attacks hold theoretical feasibility, assessing their actual viability and profitability is notably complex.
As risk managers, our responsibility involves effectively balancing risk and reward. V3 was built with mechanisms designed to mitigate risk, particularly for assets considered “riskier.” Through the implementation of suitable supply limits and debt ceilings, we can reduce the likelihood of such attacks and curtail risk dynamically in response to evolving community risk preferences.
Should the community wish to list wGHO as collateral, and given the present liquidity and limited historical data for GHO, we recommend listing in isolation mode with an initial 1M supply cap and a debt ceiling of $1M.