title: [ARFC] MaticX Risk Parameter Interest Rate Polygon v3 Upgrade discussion: https://governance.aave.com/t/arfc-maticx-polygon-v3-upgrade/11555 shortDescription: Update the MaticX reserve on Polygon v3 to enable borrowing, introduce a BorrowCap and increase the SupplyCap. author:Llama DeFi_Consulting scottincrypto & efecarranza created: 2023-02-16

Summary

Llama with support from Gauntlet proposes upgrading the MaticX Reserve on Polygon to facilitate an expansion of the MaticX/wMATIC loop strategy with the introduction of rewards.

Abstract

The utilisation of the MaticX reserve has been trending higher over time and with the introduction of deposit rewards, there is an expectation the SupplyCap will be reached prohibiting additional MaticX from being deposited.

Increasing the SupplyCap enables the recursive MaticX/wMATIC strategy to grow beyond the current constraints. Enabling borrowing with a reasonable BorrowCap and the introduction of borrowing rewards, will lead to significant utilisation of the MaticX reserve.

This proposal facilitates the expansion of MaticX yield based strategies on Aave v3 Polygon by creating more favourable bootstrapping conditions. The introduction of liquidity mining rewards are expected to drive notable inflows and usage to the v3 deployment.

Motivation

Over the previous months, Llama has been working with various communities to craft favourable conditions on Aave v3 Polygon to facilitate the creation of several yield aggregation products. The below proposals details are applicable:

• Proposal to add MaticX to Aave v3 Polygon Market
• ARFC Aave v3 Polygon wMATIC Interest Rate Update
• ARFC SD Emission_Admin for Polygon v3 Liquidity Pool
• ARFC stMATIC & MaticX Emission_Admin for Polygon v3 Liquidity Pool

This proposal is a continuation of the above work.

In support of the upcoming liquidity rewards distribution, this proposal seeks to increase the SupplyCap, enable borrowing and introduce a BorrowCap sufficient to create a notable deposit yield.

Detailed analysis can be found on the governance forum, here.

Specification

The following risk parameters are being proposed and have been reviewed by Gauntlet.

Parameter	Proposed Value
Loan To Value	58.00%
Liquidation Threshold	67.00%
Liquidation Bonus	10.00%
Liquidation Protocol Fee	10.00%
SupplyCap	8.6M units
Borrowing	Enabled
BorrowingCap	5.2M

The following interest rate parameters have been reviewed by Llama.

Parameter	Proposed Value
Base	0.25%
Uoptimal	45.00%
Slope1	4.00%
Slope2	150.00%
Reserve Factor	20.00%
Stable Borrowing	Disabled
Stable Slope1	0.50%
Stable Slope2	150.00%
Base Stable Rate Offset	2.00%
Stable Rate Excess Offset	5.00%
Optimal Stable To Total Debt Ratio	20.00%

Copyright

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