KVORUM
aaveSource: Aave governance v3 · #261

Aave V2 Deprecation Update

executedMar 7, 2025, 01:17 PM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

Chaos Labs proposes further deprecation of Aave V2 by disabling new borrows across all assets on Ethereum, Polygon, and Avalanche, adjusting interest rate parameters to incentivize debt repayment, and modifying reserve factors—particularly setting high reserve factors (99-99.99%) on assets with significant bad debt to prevent further losses.

Type
parameter change

Key changes

  • Disable new borrows across all assets in Aave V2 on Ethereum, Polygon, and Avalanche to prevent further debt accumulation(high)
  • Set minimum base rate of 20% and Slope 2 of 300% on frozen assets with significant bad debt to incentivize repayment(high)
  • Set reserve factor to 99-99.99% on assets with significant bad debt to prevent Aave DAO from accruing additional net bad debt(high)
  • Adjust stablecoin parameters on Ethereum: reduce reserve factor to 70% and Slope2 to 60% for USDC, USDT, and DAI(medium)
  • Standardize Optimal Utilization to 45% for multiple frozen assets to control debt accrual rates(medium)

Notable concerns

  • Proposal includes assets with accumulated bad debt (FEI, sUSD, LUSD, USDP, FRAX, GUSD, renFIL, LINK) that will experience significantly higher borrowing costs
  • High reserve factors on specific assets may limit protocol revenue from those markets
  • Disabling borrows prevents leverage increases but existing leveraged positions remain at risk
ContractsAave V2 EthereumAave V2 PolygonAave V2 Avalanche
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

965 words

Simple Summary

Chaos labs recommends further risk parameters changes to deprecate Aave V2 protocol and encourage user migration to Aave V3

Motivation

The proposal is aimed at standardizing the parameters in the market, improving the deprecation speed of frozen markets, and reducing the risks posed by volatile collateral assets.

In order to reduce risk we recommend disabling borrows across all assets, preventing further growth of risky debt positions. This measure ensures that positions utilizing volatile or risky collateral cannot increase their leverage within the legacy implementation. It also reduces the risk of price manipulation via oracle dependencies within the V2 instance.

We also recommend standardizing the interest rate parameters of all the frozen assets by setting a minimum base rate of 20% and a Slope 2 of 300%. This step will ensure that existing positions will be strongly incentivized to repay in order to avoid fast debt accrual that can lead to liquidations. As some of the borrow utilization of the assets in question comes from bad debt accrued over the lifespan of Aave V2, we recommend setting the reserve factor of all the frozen assets to 99%. This measure prevents Aave DAO from accruing additional net bad debt.

Specification

Ethereum V2

Implement previously proposed modifications to Aave V2 as per here.

AssetChainRecommended RFRecommended Slope2
USDCEthereum70%60%
USDTEthereum70%60%
DAIEthereum70%60%

Net new Borrow deactivation

Disable new borrows across all assets in Aave V2 to prevent further debt accumulation.

AssetChainBorrowable Recommended
WAVAXAvalancheNo
DAI.eAvalancheNo
USDT.eAvalancheNo
WETH.eAvalancheNo
WBTC.eAvalancheNo
ENJEthereumNo
USDTEthereumNo
KNCEthereumNo
renFILEthereumNo
DAIEthereumNo
WBTCEthereumNo
USTEthereumNo
BUSDEthereumNo
USDCEthereumNo
MANAEthereumNo
YFIEthereumNo
RAIEthereumNo
AMPLEthereumNo
WETHEthereumNo
FEIEthereumNo
CRVPolygonNo
LINKPolygonNo
BALPolygonNo
USDTPolygonNo
WETHPolygonNo
USDC.ePolygonNo
WBTCPolygonNo
WPOLPolygonNo
DAIPolygonNo

Adjust interest rate parameters in markets where bad debt constitutes a significant portion of the total outstanding debt, ensuring that accrual rates do not exacerbate financial losses.

AssetChainRecommended BaseRecommended Slope 1Recommended Slope 2Recommended UOptimalRecommended Reserve Factor
BUSDEthereum1%----
ZRXEthereum1%-0%1%-
BATEthereum1%-0%1%-
MANAEthereum1%-0%1%-
FEIEthereum20%0%300%45%-
sUSDEthereum20%0%300%45%-
LUSDEthereum20%0%300%45%-
USDPEthereum20%0%300%45%-
FRAXEthereum20%0%300%45%-
GUSDEthereum20%0%300%45%-
TUSDEthereum1%----
renFILEthereum20%-300%45%99.99%
LINKEthereum20%0%--99.99%
USTEthereum---45%-
RAIEthereum---45%-
KNCEthereum---45%-
AMPLEthereum---45%-
BALEthereum---45%-
DPIEthereum---45%-
SNXEthereum---45%-
BALPolygon20%0%300%45%-
GHSTPolygon20%0%300%45%-
CRVPolygon20%0%300%45%-
LINKPolygon20%0%300%45%-
WBTC.eAvalanche20%0%--99.99%

References

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorumlow confidenceclaude-sonnet-5
Consistent

The decoded on-chain action is a single, argument-less execute() call to what appears to be an Aave governance payload/executor contract. This is the standard pattern used by Aave (via BGD Labs payload contracts) where a single payload contract bundles many granular parameter changes (interest rate curve updates, reserve factor changes, borrow enable/disable flags) across multiple markets and even multiple chains, and those granular actions are implemented inside the payload contract's own code rather than being visible as separate decoded arguments in this proposal's calldata. Because only one opaque execute() call is decoded, I cannot verify the specific numeric claims in the description (e.g., 70% RF / 60% Slope2 for USDC/USDT/DAI, 99% or 99.99% reserve factors for various frozen assets, or the borrow-disable list across ~29 assets on three chains) against the actual bytecode-level effects of that call. There is no evidence of a mismatch — the single action is consistent with the proposal being a standard multi-market Aave V2 deprecation payload — but the lack of decoded granularity means a rigorous line-by-line comparison of every rate/factor claim is not possible from the data provided. I am not flagging any discrepancies since none are evident, but confidence is low due to this opacity rather than any vagueness in the description itself.

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
0xa4d1…c8be
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.