Gauntlet proposes winding down Compound’s Ethereum wstETH Comet

Gauntlet has posted a proposal on the Compound Community Forum to deprecate the Ethereum wstETH Comet, contract0x3d0bb1ccab520a66e6078222fc55bc921738fafe3. Three changes: supply-side interest-rate curve goes to zero, reserve factor is set to 100%, every collateral supply cap gets zeroed. Borrow rates, collateral factors, liquidation parameters — all untouched.

The market never generated organic demand and is now running a reserve drain, making continued operation a net cost to the protocol.

The numbers behind the decision

The Comet holds 280.23 wstETH of base supply — $836,754 per the proposal — spread across 93 suppliers. Base borrow sits at 24.16 wstETH, or $72,146, from 28 borrowers. Utilization: 8.62%. Supply APR: 0.17%. Borrow APR: 1.10%.

Base supply has fallen 95.5% from 6,269 wstETH at the end of July 2025 to 280 wstETH today. Supplier count fell from 116 to 93, shedding 23 addresses — 19.8% of the earlier pool.

Supply is concentrated. The single largest supplier holds 112.93 wstETH, 40.3% of base supply, and can pull the full amount immediately. The top five combined hold 237.83 wstETH, 84.9% of the market. Seven addresses account for 90% of base supply; nine cover 95%.

Organic borrow demand never came. Excluding rsETH-collateralized borrowers, utilization never cleared 30% in any month and never exceeded 14.6% on that basis. Across 17,161 hourly snapshots covering the Comet’s full operational life, mean utilization was 26.6% and median was 15.5%. The Comet only accrues reserves at 90% utilization or above — a threshold it reached in only 100 of those snapshots, 0.58% of the time.

The market launched September 14, 2024. Current reserves sit at 22.33 wstETH, valued at $66,665 in the proposal. Between May 10, 2026 and September 2, reserves fell from 22.401297 wstETH to 22.326258 wstETH — a decline of 0.075 wstETH over 115 days. At current parameters the projected net drain is 0.2184 wstETH per year, $652 annually, with an effective reserve factor of negative 82.5%.

What the parameter changes do

Setting bothsupplyPerYearInterestRateSlopeLow andsupplyPerYearInterestRateSlopeHigh to zero redirects all borrower interest to protocol reserves rather than paying suppliers. At current balances, reserves would accrue 0.2648 wstETH per year once changes take effect, while suppliers would receive 0% supply APR.

Zeroing every collateral supply cap closes the market to new deposits of any collateral type — not only fresh wstETH. Existing balances remain accessible after enactment. Nobody gets forced out; supply APR falls to 0%.

The largest borrower holds 19.74 wstETH, 81.7% of all outstanding borrow, with tETH as collateral. Excluding rsETH-collateralized accounts, borrow has held between 23.8 and 31.4 wstETH continuously since April 18, 2026.

The rsETH episode preceded the market’s only recorded liquidation. Utilization first crossed 100% at 02:59:59 UTC on May 5 and stayed above 100% through May 8. The exposure closed May 9, in the Comet’s single recorded liquidation. One liquidation in nearly two years of operation, utilization that spent most of its life well below 30%, and reserves at 22.33 wstETH against a projected annual drain of 0.2184 wstETH at current parameters.