Summary
This proposal reduces the Collateral Factor for the CVX Market on FiRM from 70% to 65% and increases the Liquidation Factor from 60% to 100%. Following the October 10th market event, Chainlink has re-tuned Off-Chain Reporting (OCR) timing parameters for the CVX/USD feed to improve transaction inclusion latency under network congestion. These updated risk settings work in conjunction with the oracle improvements to secure the CVX FiRM market and enable safe resumption of lending activity.
Background
The most critical period on October 10th occurred during the crash epicenter between 21:17-21:25 UTC (8 minutes), when CVX/USD fell from approximately $2.30 to $0.98, a 58% decline compressed into five consecutive oracle rounds. Each of these updates exceeded 5-25% deviation, with the largest single-round move at -25.1%.
As these delayed updates posted, previously healthy positions were suddenly pushed below liquidation thresholds, creating a multi-block liquidation cascade confirmed in FiRM liquidation traces. Because only 60% of each position could be liquidated at a time, several accounts required multiple transactions to close, amplifying network congestion and realized slippage.
Read the full technical analysis: October 10th Stress Test: FiRM Performance Analysis.
Coordination with Chainlink
Members of the RWG and TWG have been coordinating since with Chainlink’s data team to review the CVX/USD feed and discuss mitigation strategies. The Chainlink team confirmed that OCR timing parameters have been re-tuned to improve transaction inclusion reliability during high-congestion periods, following RWG’s request. These optimizations are expected to significantly reduce, but not fully eliminate block-inclusion latency under stress conditions. Until the release of new latency performance metrics (p95/p99), RWG’s risk posture will maintain a conservative collateral configuration to ensure resilience against remaining timing gaps.
Rationale
Lowering the Collateral Factor to 65% provides a safety margin against price-update latency and compressed volatility shocks, while increasing the Liquidation Factor to 100% ensures each liquidation fully clears borrower debt in one step. This configuration directly addresses the October 10th cascade pattern, preventing recursive partial liquidations and strengthening FiRM’s stability during extreme events.
Next Steps
Chainlink will review OCR latency and transaction-inclusion metrics for CVX and related feeds (USR/USD, crvUSD/USD, sUSDe/USD, cbBTC/USD, DAI/USD, and CRV/USD) to assess whether tail-latency or deviation-threshold tuning could further enhance responsiveness. These feeds represent FiRM’s highest-leverage and correlation-sensitive markets, and Chainlink’s guidance will inform whether any configuration adjustments are advisable.
There are currently three healthy open positions in the CVX Market with combined outstanding debt of 23,000 DOLA. Inverse Finance’s governance process will provide ample time for borrowers to re-manage their positions prior to enforcement of the new parameters. Until the update is live, new borrowing activity will be limited as a precautionary measure.
On-Chain Actions
- Set CVX Market Collateral Factor 65%
- Set CVX Market Liquidation Factor 100%