Should twelve (12) total risk parameters across eight (8) Aave V2 assets be updated?
Simple Summary
A proposal to adjust twelve (12) total risk parameters across eight (8) Aave V2 assets including LTV, Liquidation Threshold, and Liquidation Bonus.
Abstract
This proposal is a batch update of risk parameters to align with the the Moderate risk level chosen by the Aave community. These parameter updates are a continuation of Gauntlet's regular parameter recommendations.
Motivation
This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.
In addition, we propose to enable utilizing FEI as a collateral on Aave. The initial parameters for FEI will be an LTV of 50%, a Liquidation Threshold of 60%, and a Liquidation Bonus of 6.5%. Most of the stablecoins that can be used as collateral are more liquid, and our platform's analysis recommends initially capping the amount of collateral that can be liquidatable to the average daily trading volume. If user behavior and market conditions over the coming months continue to show safe conditions for increasing capital efficiency on FEI, we shall recommend ramping up the LTV, Liquidation Threshold, and Liquidation Bonus incrementally.
Specification
This past week did not see outsized changes in market conditions nor within the Aave protocol. There were slight volatility drops and increases in trading volume and liquidity for most assets. Our platform recommends the following set of parameter changes that will decrease liquidation bonuses on several less-utilized assets.
| Parameter | Current Value | Recommended Value |
|---|---|---|
| BAL Liquidation Bonus | 8.0% | 7.5% |
| CRV Loan To Value | 45% | 55% |
| DPI Loan To Value | 65% | 70% |
| DPI Liquidation Bonus | 8.5% | 7.5% |
| DPI Liquidation Threshold | 70% | 75% |
| ENJ Loan To Value | 60% | 70% |
| FEI Loan To Value | 0% | 50% |
| FEI Liquidation Threshold | 0% | 60% |
| FEI Liquidation Bonus | 0% | 6.5% |
| MANA Loan To Value | 65% | 70% |
| MKR Liquidation Bonus | 8.0% | 7.5% |
| UNI Liquidation Bonus | 8.0% | 7.5% |
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 2022-01-18
Off-Chain Vote
YAE
143.57K 98.9%
ABSTAIN
151.99 0.1%
NAY
1.43K 1%
Timeline
Jan 14, 2022Proposal created
Jan 14, 2022Proposal vote started
Jan 19, 2022Proposal vote ended
Oct 26, 2023Proposal updated