[ARFC] Chaos Labs Risk Parameter Updates - MAI on Aave V3 - 2023.7.23

Simple Summary

A proposal to reduce the Supply and Borrow Caps and Debt Ceiling for MAI on Aave V3 Avalanche

Motivation

In light of MAI's recent depegging and the insights provided in the Chaos Labs - MAI Depeg Update , we propose a conservative approach, including a temporary reduction in both the supply and borrow caps as well as the debt ceilings. With consideration of the current usage on Aave and existing liquidity, we recommend implementing the following updates:

1. Set supply caps at the current supply in each deployment
2. Set borrow cap at the current borrow in each deployment
3. Set Debt Ceiling at 2*(Liquidity within LB range / MAI LT)

Note: Final recommendations will be rounded for simplicity

Recommendations

Chain	Current Supply Cap	Recommended Supply Cap	Current Borrow Cap	Recommended Borrow Cap	Current Debt Ceiling ($)	Recommended Debt Ceiling ($)
Avalanche	700,000	20,000	460,000	10,000	2,000,000	10,000

Note: Given the current usage on Polygon, these recommendations effectively disable further usage of MAI as collateral.

Disclaimer

Chaos Labs has not been compensated by any third party for publishing this ARFC.

Copyright

Copyright and related rights waived via CC0