hvax.eth

[AAVE] pyUSD Parameters Optimization

Voting ended 6 months agoSucceeded

Simple Summary

This proposal updates the pyUSD reserve configuration on Ethereum v3 Core.

Motivation

This publication proposes aligning the Reserver Factor and Uoptimal for the pyUSD Reserve with various other stables ahead of a potential incentive campaign from PayPal.

The key changes include:

Adjusting pyUSD Reserve Factor (RF) from 20% to 10%: With <$15M in liquidity within the Reserve, decreasing the RF routes a larger portion of the interest paid by users who borrow pyUSD to users who deposit pyUSD.
Adjusting Optimal Utilization (Uoptimal) from 80% to 90%: We recommend to increasing the Uoptimal of pyUSD, to better reflect the borrow and supply dynamism for these assets.
Reducing Slope 1 from 10.5% to 6.5%: Aligns pyUSD’s interest rate curve with other stablecoins in Aave v3 Ethereum, moderating borrow costs up to the kink and improving competitiveness.
Setting Loan-to-Value (LTV) from 75% to 0%: Disables pyUSD as collateral to minimize oracle-related risks and reduce incentive-driven looping, ensuring healthier market growth.

Specification

The following pyUSD Reserve parameters are to be updated:

|
| | Asset | PYUSD | PYUSD | | UOptimal | 80% | 90% | | Reserve Factor | 20% | 10% | | Slope 1 | 10.5% | 6.5% | | LTV | 75% | 0% |

References

Implementation: AaveV3Ethereum
Tests: AaveV3Ethereum
Snapshot: Direct-to-AIP
Discussion

Copyright

https://app.aave.com/governance/v3/proposal/?proposalId=384

Off-Chain Vote

YAE

147 HVAXVC91.9%

NAY

13 HVAXVC8.1%

Quorum:16000%

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Discussion

[AAVE] pyUSD Parameters Optimization

Timeline

Oct 03, 2025Proposal created

Oct 04, 2025Proposal vote started

Oct 06, 2025Proposal vote ended

Mar 17, 2026Proposal updated

Motivation

This publication proposes aligning the Reserver Factor and Uoptimal for the pyUSD Reserve with various other stables ahead of a potential incentive campaign from PayPal.

The key changes include:

Adjusting pyUSD Reserve Factor (RF) from 20% to 10%: With <$15M in liquidity within the Reserve, decreasing the RF routes a larger portion of the interest paid by users who borrow pyUSD to users who deposit pyUSD.

Adjusting Optimal Utilization (Uoptimal) from 80% to 90%: We recommend to increasing the Uoptimal of pyUSD, to better reflect the borrow and supply dynamism for these assets.

Reducing Slope 1 from 10.5% to 6.5%: Aligns pyUSD’s interest rate curve with other stablecoins in Aave v3 Ethereum, moderating borrow costs up to the kink and improving competitiveness.

Setting Loan-to-Value (LTV) from 75% to 0%: Disables pyUSD as collateral to minimize oracle-related risks and reduce incentive-driven looping, ensuring healthier market growth.

Specification

The following pyUSD Reserve parameters are to be updated:

| | Asset | PYUSD | PYUSD | | UOptimal | 80% | 90% | | Reserve Factor | 20% | 10% | | Slope 1 | 10.5% | 6.5% | | LTV | 75% | 0% |