Gauntlet has proposed raising the borrow rate base on Compound's Ethereum WETH comet from 1.00% to 1.50% while halving the slope below the kink, keeping the kink APR at 2.00%. The motivation is structural: the comet has operated with an effectively zero or negative implied reserve factor for 98.93% of the past 90 days, meaning the protocol has been subsidizing borrowers from reserves rather than accumulating them.
For Armada's crypto repo desk, Compound's WETH rates are a key external benchmark for pricing ETH-collateralized repo. A rising borrow floor at the dominant DeFi ETH lending venue signals upward pressure on ETH funding costs across the market. Armada should review whether current ETH repo rates remain competitive and appropriately priced against this new baseline, particularly for hedge fund and market maker counterparties who arbitrage DeFi and CeFi rates.