[ARFC] Adjusting Interest Rate Curve for weETH on Arbitrum and Base
Author: ACI ( Aave Chan Initiative)
Date: 2024-05-27
Summary
The current proposal suggests adjusting the Interest Rate Curve for weETH on Arbitrum and Base networks to align with the mainnet, so Risk Parameters will be the same for weETH on Mainnet, Arbitrum, and Base networks.
The aim is to optimize the utilization rates and improve both lending and borrowing for users.
Motivation
By adjusting the Interest Rate Curve, we aim to encourage more borrowing and lending activity, optimize the utilization rates, and enhance liquidity on Arbitrum and Base networks.
- Base Rate Increase: Increasing the base rate provides a more attractive return for lenders, encouraging more weETH deposits.
- Slope 1 Adjustment: Adjusting the Stable Rate Slope offers slightly higher interest for moderate utilization, making borrowing more attractive.
- Slope 2 Adjustment: Reducing Stable Rate Slope 2 prevents excessively high borrowing costs at higher utilization rates, thus avoiding sharp declines in borrowing activities.
- Utilization Rate Optimal: Raising the optimal utilization rate aims to better match the network's current usage patterns, ensuring a smoother transition between interest rate slopes and maintaining liquidity.
- Reserve Factor: weETH borrowers and LP are less sensible to interest rates due to external incentives, to Optimize the DAO revenue the reserve factor is changed.
Specification
Change Arbitrum and Base Risk Parameters for weETH to align with Mainnet.
Proposed Changes:
| A | Arbitrum | Base |
|---|---|---|
| Parameter | Value | Value |
| Isolation Mode | No | No |
| Borrowable | Yes | Yes |
| Collateral Enabled | Yes | Yes |
| Supply Cap (weETH) | 150 | |
| Borrow Cap (weETH) | 60 | |
| Debt Ceiling | - | - |
| LTV | 72.50% | 72.50% |
| LT | 75.00% | 75.00% |
| Liquidation Bonus | 7.50% | 7.50% |
| Liquidation Protocol Fee | 10.00% | 10.00% |
| Variable Base | 0.0% | 0.0% |
| Variable Slope1 | 7.00% | 7.00% |
| Variable Slope2 | 300.00% | 300.00% |
| Uoptimal | 35.00% | 35.00% |
| Reserve Factor | 45.00% | 45.00% |
| Stable Borrowing | Disabled | Disabled |
| Flashloanable | Yes | Yes |
| Siloed Borrowing | No | No |
| Borrowed in Isolation | No | No |
| E-Mode Category | ETH-correlated | ETH-correlated |
Disclaimer
The ACI is not presenting this ARFC on behalf of any third party and is not compensated for creating this ARFC.
Next Steps
- If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.
Copyright
Copyright and related rights waived via CC0.
Off-Chain Vote
YAE
675.2K AAVE100%
NAY
0.1 AAVE0%
ABSTAIN
0.03 AAVE0%
Timeline
Jun 02, 2024Proposal created
Jun 02, 2024Proposal vote started
Jun 05, 2024Proposal vote ended
Jan 31, 2026Proposal updated