KVORUM
aaveSource: Aave governance v3 · #255

Update AAVE Token LTV/Liquidation Percentages

executedMar 1, 2025, 08:27 AM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

Proposal increases AAVE token's Loan-to-Value (LTV) and Liquidation Threshold on Ethereum and Arbitrum: Ethereum LTV from 66% to 69% and LT from 73% to 76%; Arbitrum LTV from 63% to 66% and LT from 70% to 73%. This improves capital efficiency for AAVE holders by allowing greater borrowing power while maintaining prudent risk levels.

Type
parameter change

Key changes

  • Ethereum Core: AAVE LTV increased from 66% to 69%(medium)
  • Ethereum Core: AAVE Liquidation Threshold increased from 73% to 76%(medium)
  • Arbitrum: AAVE LTV increased from 63% to 66%(medium)
  • Arbitrum: AAVE Liquidation Threshold increased from 70% to 73%(medium)

Notable concerns

  • Risk of endogenous collateral risk if ratios moved too aggressively, though proposal states adjustments are modest and below more liquid assets
ContractsAaveV3EthereumAaveV3Arbitrum
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

301 words

Simple Summary

This proposal increases the AAVE's LTV and liquidation threshold values on ethereum core and arbitrum instances. AAVE's LTV is increased from 66% to 69% on core instance and 63% to 66% on arbitrum instance while the liquidation threshold is increased from 73% to 76% on core instance and 70% to 73% on arbitrum instance.

Motivation

Aave’s token (AAVE) has meaningfully grown in its liquidity, market capitalization, and market share in the DeFi space. As a result of these meaningful gains, a modest upward adjustment to AAVE’s ratios is worth considering.

A higher Loan-to-Value (LTV) and Liquidation Threshold (LT) can improve capital efficiency for AAVE holders, allowing them to access greater borrowing power without significantly increasing systemic risk. This change aligns with AAVE’s broader goal of maintaining a competitive and sustainable lending environment. Additionally, similar assets with comparable liquidity and adoption levels already operate at or above the proposed thresholds, reinforcing the prudence of this adjustment.

To be clear – we do not want to create excess endogenous collateral risk by moving the LTV and Liquidation ratios too high. With that balance in mind, the proposed percentages are not aggressive. Indeed, the newly proposed 71% LTV and 78% liquidation percentage is still meaningfully below other more liquid and mature collateral.

Specification

This proposal will achieve the following:

InstanceAssetCurrent LTVRec. LTVCurrent LTRec. LT
Ethereum CoreAAVE66.0%69.0%73.0%76.0%
ArbitrumAAVE63.0%66.0%70.0%73.0%

References

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorummedium confidenceclaude-sonnet-5
Minor discrepancy

The decoded calldata contains a single action: an execute() call (decoded as a bare fallback with no arguments) to one contract on Ethereum mainnet. This is the typical pattern for Aave governance, where the short executor delegatecalls into a purpose-built payload contract that contains the actual logic for updating risk parameters, and in cross-chain proposals also triggers a CrossChainController to relay parameter updates to instances like Arbitrum. Because no arguments were decoded, the actual LTV/LT values being set (69%/76% on Core, 66%/73% on Arbitrum, per the description) cannot be independently verified from the calldata alone — this is common for this proposal architecture and not itself suspicious, but it does limit verification confidence. Separately, the description itself contains an internal inconsistency: the Motivation section cites 'newly proposed 71% LTV and 78% liquidation percentage', which does not match the 69%/76% (Core) and 66%/73% (Arbitrum) figures stated in the Summary and Specification table. This looks like a copy/paste artifact from a different proposal and could mislead a quick reader, though the Specification table (the authoritative figures) is self-consistent. No evidence in the decoded calldata contradicts the Specification table's figures, and no unrelated or malicious actions are present. Given the opacity of the single decoded action and the internal description inconsistency, I classify this as a minor discrepancy rather than a material or severe one, with medium confidence since the calldata's lack of decoded arguments limits full verification of exact values.

Discrepancies

  • lowmisleading phrasing

    The Motivation section states the 'newly proposed 71% LTV and 78% liquidation percentage', which does not match the actual proposed values stated in the Simple Summary and Specification table (69%/76% on Core, 66%/73% on Arbitrum). This appears to be leftover/copy-paste text from a different proposal and could confuse readers about the true target parameters, though the Specification table (which should govern the on-chain implementation) is internally consistent.

    “the newly proposed 71% LTV and 78% liquidation percentage is still meaningfully below other more liquid and mature collateral”

  • lowomitted in description

    Only a single decoded action (an opaque execute() call to a mainnet payload contract) is provided, with no arguments decoded and no visible action targeting an Arbitrum contract. The description explicitly claims parameter changes on both Ethereum Core and Arbitrum instances. This is standard for Aave's payload/bridge architecture (a single mainnet execute() can trigger cross-chain updates), so it is not necessarily a real inconsistency, but the calldata as provided does not allow independent verification that the Arbitrum-side changes or the exact numeric values match the description.

Generated by Kvorum
model: claude-sonnet-5
provider: anthropic
profile: anthropic-strong-v1
prompt: v1.0
generated: 2mo ago
Review the decoded actions ↗

04Actions

1 total
#0fallback()chain 0x1
Target
0x9a8d…4967
Value
0 wei
Function
fallback()
Arguments
{}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total

No votes recorded yet.

07Forum

No forum thread is confidently linked to this proposal.