Harmonize USDT Risk Parameters on Aave V3 Markets
01Summary
Harmonize USDT risk parameters across Aave v3 markets by standardizing Loan-to-Value (LTV) at 77% and Liquidation Threshold (LT) at 80% across all networks, matching DAI and USDC parameters on Ethereum, and removing USDT from isolation mode on Optimism, Polygon, and Arbitrum.
- Type
- parameter change
Key changes
- Standardize USDT LTV to 77% across all Aave v3 deployments (Ethereum, Optimism, Polygon, Arbitrum, Avalanche, Metis, BNB)(high)
- Standardize USDT Liquidation Threshold to 80% across all Aave v3 deployments(high)
- Remove USDT from isolation mode on Optimism, Polygon, and Arbitrum markets(high)
- Maintain liquidation bonus at 5% on L2s and 4.5% on Ethereum mainnet(medium)
Notable concerns
- USDT removal from isolation mode is permanent and irreversible once executed
- LTV increases on Ethereum mainnet (74% to 77%) and some L2s (75% to 77%) increase borrowing capacity and associated risk
- Liquidation threshold changes on Ethereum (76% to 80%) and Avalanche (81% to 80%) alter liquidation dynamics
Generated by Kvorum
02Description
Simple Summary
USDT has various risk parameters across the various Aave v3 markets. This proposals aims to harmonize the risk parameters to better align the markets by removing USDT from isolation mode and normalizing risk parameters.
Motivation
USDT has seen strong borrow demand across networks with borrow utilization over 50% on Aave v3 Ethereum Mainnet and good utilization on secondary networks. However, the various markets currently have different risk parameters, leading to some inefficiency.
This proposal aims to bring the various USDT markets in line with a single set of LTV, liquidation threshold, and liquidation bonus parameters.
Specification
The proposal sets the LT/LTV of USDT on all deployments at 80/77, matching that of DAI and USDC on v3 Ethereum. Regarding the LB, it will stay the same at 5% on the L2s and 4.5% on Ethereum.
| Asset | Network | Current Liquidation Threshold | New Liquidation Threshold | Current LTV | New LTV |
|---|---|---|---|---|---|
| USDT | Mainnet | 76% | 80% | 74% | 77% |
| USDT | Optimism | 80% | 80% | 75% | 77% |
| USDT | Polygon | 80% | 80% | 75% | 77% |
| USDT | Arbitrum | 80% | 80% | 75% | 77% |
| USDt | Avalanche | 81% | 80% | 75% | 77% |
| m.USDT | Metis | 80% | 80% | 75% | 77% |
| USDT | BNB | 80% | 80% | 75% | 77% |
This proposal will also remove USDT from isolation mode on the following markets (please notes that once an asset is removed from isolation mode it can't be added back again):
- Optimism
- Polygon
- Arbitrum
References
- Implementation: AaveV3Ethereum, AaveV3Polygon, AaveV3Avalanche, AaveV3Optimism, AaveV3Arbitrum, AaveV3Metis
- Tests: AaveV3Ethereum, AaveV3Polygon, AaveV3Avalanche, AaveV3Optimism, AaveV3Arbitrum, AaveV3Metis
- Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The decoded on-chain action is a single generic execute() (fallback) call to what appears to be an Aave governance payload contract on Ethereum Mainnet. This is the standard pattern for Aave v3 cross-chain governance proposals: the mainnet proposal triggers execution of a payload contract whose bytecode contains the actual parameter-setting logic (and, for other networks, triggers cross-chain bridge messages to network-specific payload contracts). Because only a fallback call is decoded here, with no readable function arguments, it is not possible to directly verify from the calldata alone whether the specific LTV/LT/liquidation-bonus values or isolation-mode removals described in the prose are what the payload actually sets. This is expected and routine for this proposal type — the referenced implementation contracts (linked in the description) contain the actual per-market parameter logic, which is normal for BGD Labs/Aave multi-chain risk proposals. Since there is no visible contradiction between the description and the single visible action, and the pattern matches standard practice for this proposal architecture, I mark this consistent, but confidence is low because the decoded calldata does not expose enough detail to fully confirm the specific numeric claims in the table.
Generated by Kvorum
04Actions
- Target
- 0x54f3…a6ff
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
No forum thread is confidently linked to this proposal.
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