Should nine (9) total risk parameters across eight (8) Aave V2 assets be adjusted?
ARC: Risk Parameter Updates 2021-10-14
Simple Summary
A proposal to adjust nine (9) total risk parameters across eight (8) Aave V2 assets including LTV, Liquidation Threshold, and Liquidation Bonus.
Abstract
This proposal is a batch update of three risk parameters to align with the the Moderate risk level chosen by the Aave community. These paramater updates are a continuation of Gauntlet's regular parameter recommendations, the latest being AIP-40: Risk Parameter Updates 2021-10-07.
Motivation
This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets. For more detail on Gauntlet's first two months of recommendations and their impact, please see our Monthly Risk Report.
Specification
| Parameter | Current Value | Recommended Value |
|---|---|---|
| BAT Liquidation Threshold | 75% | 80% |
| CRV Loan To Value | 35% | 45% |
| CRV Liquidation Threshold | 55% | 60% |
| ENJ Loan To Value | 55% | 60% |
| REN Loan To Value | 50% | 55% |
| SUSHI Loan To Value | 30% | 45% |
| UNI Loan To Value | 55% | 60% |
| WBTC Liquidation Bonus | 7.5% | 6.5% |
| YFI Liquidation Bonus | 8% | 7.5% |
See below volatility and exchange volume data from 10/07 to 10/14 that were important drivers for the updated parameter recommendations.
| Symbol | 10-14 Volatility | 10-07 Volatility | Volatility Change | Weekly Average Daily Volume Change (%) |
|---|---|---|---|---|
| BAT | 0.929440262 | 1.26231086 | -0.332870598 | -5.5534425 |
| CRV | 1.680964856 | 2.06913145 | -0.388166594 | -20.9446652 |
| ENJ | 1.165823176 | 1.684204979 | -0.518381803 | -27.1658359 |
| REN | 1.826713874 | 2.073377777 | -0.246663903 | -49.2642672 |
| SUSHI | 1.521203501 | 1.831060432 | -0.309856931 | -17.0524519 |
| UNI | 1.328292578 | 1.625790476 | -0.297497898 | -45.1124435 |
| WBTC | 0.694701853 | 0.83363382 | -0.138931967 | 50.5601238 |
| YFI | 1.038356955 | 1.240436029 | -0.202079074 | 81.6590629 |
Risk Dashboard
The community should use Gauntlet's Risk Dashboard to better understand the updated parameter suggestions and general market risk in Aave V2.
Next Steps
- Targeting an AIP on 2021-10-18th should this Snapshot poll pass.
Off-Chain Vote
YAE
1.31K 90.7%
NAY
132.83 9.2%
ABSTAIN
1.84 0.1%
Timeline
Oct 15, 2021Proposal created
Oct 15, 2021Proposal vote started
Oct 18, 2021Proposal vote ended
Oct 26, 2023Proposal updated