KVORUM
aaveSource: Aave governance v3 · #306

Remove USDe Debt Ceiling and Introduce USDe Stablecoins E-mode

executedMay 10, 2025, 02:29 PM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

Remove the debt ceiling on USDe (currently 103.68M) and disable isolation mode on Aave V3 Ethereum Core, while introducing a new USDe/Stablecoin E-Mode with 90% LTV, 93% liquidation threshold, and 2% liquidation bonus to accommodate growing demand for USDe, which has shown strong risk profile and reached $86.4M on Aave despite ceiling constraints.

Type
parameter change

Key changes

  • Remove debt ceiling on USDe (currently set at 103,680,000)(high)
  • Disable isolation mode for USDe(high)
  • Introduce new USDe/Stablecoin E-Mode with LTV of 90%, liquidation threshold of 93%, and liquidation bonus of 2%(high)
  • Make USDC, USDT, and USDS borrowable within the USDe/Stablecoin E-Mode while keeping USDe as collateral only(medium)

Notable concerns

  • sUSDe has experienced significant outflows (from 1B to 175M over 90 days) due to dwindling yields, which may indicate market preference shift
  • Proposal relies on historical stress tests and analyses showing USDe's stabilization mechanisms, but market conditions could change
  • More aggressive E-Mode parameters for USDe compared to sUSDe E-Mode reflects confidence in USDe's lower risk profile but introduces higher leverage capability
ContractsAaveV3EthereumUSDe
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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02Description

490 words

Simple Summary

Given the significant demand for USDe and its safe usage profile on Aave V3’s Ethereum Core deployment, Chaos Labs recommends removing the asset’s debt ceiling and introducing a new E-Mode configuration tailored to its current primary use case.

Motivation

The proposal to lift the debt ceiling on USDe stems from its growing user demand and consistently strong risk profile. USDe’s appeal has been further amplified by the recent decline in the underlying yield of sUSDe, making the unstaked version (USDe) more attractive due to its deliberately enhanced points-earning potential in an effort to shift the incentive structure in accordance with aggregate revenue generation, earning 25x points as opposed to sUSDe’s 5x.

Over the past 30 days, the total supply of USDe has surged to 410M, led by two primary whitelisted USDe redemption addresses leveraging the reserve, periodically performing redemptions. However, its growth on Aave has been relatively capped at $86.4M due to the limitations imposed by the debt ceiling and its steward-governed constraints.

Conversely, due to dwindling yields, the sUSDe market has seen considerable outflows from Aave over the last 90 days, decreasing from nearly 1B to 175M today, with $135M in collateralized stablecoin debt.

Furthermore, USDe offers a lower risk profile compared to its staked counterpart, sUSDe, primarily due to the absence of the 7-day unstaking period as well as the use of an aggregate oracle that incorporates an exchange rate introduced through staking. This unstaking delay introduces liquidity constraints and potential exposure to short-term price volatility for sUSDe holders.

The initial implementation of a debt ceiling was intended as a protective measure to limit systemic exposure during the initial adoption period. However, historical data and recent analyses, including extensive stress tests and active redemption patterns, have shown robust stabilization mechanisms inherent to USDe, which effectively mitigate potential risks associated with price deviations. By eliminating the debt ceiling, Aave can better accommodate growing market demand and with the introduction of a custom E-Mode, provide users with greater flexibility to leverage USDe efficiently.

The recommended parameters for the USDe/Stablecoin E-Mode are slightly more aggressive than those for sUSDe/Stablecoin E-Mode, reflecting the lower risk profile.

Specification

USDe on Aave V3 Ethereum Core

ParameterCurrent ValueRecommended Value
Isolation-modeYesNo
Debt Ceiling103,680,000-

USDe/Stablecoin E-Mode

AssetUSDeUSDCUSDTUSDS
CollateralYesNoNoNo
BorrowableNoYesYesYes
LTV90%
LT93%
Liquidation Bonus2%

References

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorum

A calldata-vs-description analysis is not generated yet. Review the decoded actions →

04Actions

1 total
#0fallback()chain 0x1
Target
0xea04…582b
Value
0 wei
Function
fallback()
Arguments
{}
Calldata

05Tally

Summed from votes

Voters36
VP participating489.2K
Outcome (current)For
Current support100%

06Voters

36 total

No votes recorded yet.

07Forum

No forum thread is confidently linked to this proposal.