pyUSD Parameters Optimization
01Summary
Updates pyUSD reserve configuration on Ethereum v3 Core by reducing Reserve Factor from 20% to 10%, increasing Optimal Utilization from 80% to 90%, reducing Slope 1 from 10.5% to 6.5%, and disabling pyUSD as collateral (LTV from 75% to 0%) to prepare for a potential PayPal incentive campaign.
- Type
- parameter change
Key changes
- Reserve Factor reduced from 20% to 10% - routes larger portion of borrower interest to depositors(medium)
- Optimal Utilization increased from 80% to 90% - better reflects borrow and supply dynamics(medium)
- Slope 1 reduced from 10.5% to 6.5% - aligns interest rate curve with other stablecoins and reduces borrow costs(medium)
- LTV set to 0% from 75% - disables pyUSD as collateral to minimize oracle risks and reduce incentive-driven looping(high)
Notable concerns
- Disabling collateral functionality removes a feature previously available to users
- Changes made in anticipation of PayPal incentive campaign which is not yet confirmed
Generated by Kvorum
02Description
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:
| Parameters | Current Value | Updated Value |
|---|---|---|
| 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
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal follows the standard Aave v3 'payload contract' governance pattern: a single on-chain action calls execute() on a purpose-built payload contract (0x4edc...58d1e353) rather than exposing individual parameter-setting calls in the top-level calldata. This is consistent with the referenced implementation link (AaveV3Ethereum_PyUSDParametersOptimization), which is the standard BGD Labs pattern for reserve parameter updates. Because the actual RF/Uoptimal/Slope1/LTV values are encoded inside the payload contract's bytecode rather than passed as decoded arguments in this single execute() call, I cannot line-item verify each numeric claim (20%→10% RF, 80%→90% Uoptimal, 10.5%→6.5% Slope1, 75%→0% LTV) directly against decoded calldata arguments. However, this opacity is expected and routine for this proposal type — it is not itself evidence of a mismatch, and the target address plausibly corresponds to the linked implementation contract. Given the single, expected 'execute()' action and no contradictory signals, I find no discrepancy between the description and the decoded action, but I mark confidence as medium rather than high because the underlying parameter values are not independently visible in the calldata provided.}}, discrepancies:[]}, wait - I need to output valid JSON only.,
Generated by Kvorum
04Actions
- Target
- 0x4edc…f353
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| EA0xea0c…6b5a | For | 333K | 37.50% | — | 1y ago |
| 570x57ab…2922 | For | 279.2K | 31.45% | — | 1y ago |
| EZezr3al.eth0x8659…7d0e | For | 136.2K | 15.34% | — | 1y ago |
| B90xb933…8dd1 | For | 39.6K | 4.46% | — | 1y ago |
| EC0xecc2…6ac9 | For | 26K | 2.93% | — | 1y ago |
| 870x8787…ea52 | For | 25.7K | 2.89% | — | 1y ago |
| 3D0x3ddc…05b0 | For | 20.1K | 2.27% | — | 1y ago |
| 8B0x8b37…2a22 | For | 10.3K | 1.16% | — | 1y ago |
| 3E0x3e32…c4d0 | For | 7.6K | 0.86% | — | 1y ago |
| 2C0x2cc1…4df1 | For | 6.7K | 0.75% | — | 1y ago |
| 0E0x0e00…ccfc | For | 1.1K | 0.12% | — | 1y ago |
| 440x4444…34b3 | For | 682 | 0.08% | — | 1y ago |
| B30xb356…c826 | For | 480 | 0.05% | — | 1y ago |
| 4D0x4d26…7017 | For | 397.4 | 0.04% | — | 1y ago |
| A50xa54f…0f31 | For | 264.2 | 0.03% | — | 1y ago |
| F10xf13c…6dd3 | For | 236.3 | 0.03% | — | 1y ago |
| 080x0865…24ce | For | 149.4 | 0.02% | — | 1y ago |
| 6E0x6eed…91d3 | For | 115.4 | 0.01% | — | 1y ago |
| 270x2748…ac26 | For | 16.1 | 0.00% | — | 1y ago |
| 430x43dd…40e0 | For | 7.9 | 0.00% | — | 1y ago |
| F70xf7fb…dc1a | For | 6 | 0.00% | — | 1y ago |
| 7E0x7e6c…73eb | For | 5.6 | 0.00% | — | 1y ago |
| BB0xbb86…3527 | For | 4.8 | 0.00% | — | 1y ago |
| 5D0x5de5…e69c | For | 3.2 | 0.00% | — | 1y ago |
| 050x0579…4048 | For | 1 | 0.00% | — | 1y ago |
| 010x019e…2ee3 | For | 0.3 | 0.00% | — | 1y ago |
| 010x0100…7cc9 | For | 0.2 | 0.00% | — | 1y ago |
| 160x168f…7400 | For | 0.1 | 0.00% | — | 1y ago |
| 2F0x2f2f…f78a | For | 0 | 0.00% | — | 1y ago |
| 4D0x4d4a…1bdf | For | 0 | 0.00% | — | 1y ago |
07Forum
No forum thread is confidently linked to this proposal.
08Similar proposals
- aaveexecutedEthereum v2 - Parameters Update74%
- aaveexecutedReserve Factor Updates August74%
- aaveexecutedReserve Factor Updates Mid July74%
- aaveexecutedPolygon V2 Reserve Factor Updates & Interest Rate Increases74%
- aaveexecutedReserve Factor Updates Mid October73%
- aaveexecutedEthereum v2 Reserve Factor Adjustment73%
- aaveexecutedReserve Factor Updates Late September73%
- aaveexecutedIncrease Bridged USDC Reserve Factor Across All Deployments73%
- aaveexecutedReserve Factor Updates Late August73%
- aaveexecutedReserve Factor Upgrades73%