Ethereum V2 LT Reductions
01Summary
Proposal to reduce Liquidation Thresholds (LT) on 5 frozen assets in Aave V2 Ethereum as part of the V2 deprecation. Changes affect CRV, LINK, MKR, UNI, and ZRX with total expected liquidations of $5.49k across 31 accounts.
- Type
- parameter change
Key changes
- CRV Liquidation Threshold reduced from 14% to 0.01%(high)
- LINK Liquidation Threshold reduced from 72% to 68%(medium)
- MKR Liquidation Threshold reduced from 14% to 10%(medium)
- UNI Liquidation Threshold reduced from 14% to 0.01%(high)
- ZRX Liquidation Threshold reduced from 8% to 5%(medium)
Notable concerns
- 31 accounts will become eligible for liquidation upon approval
- Total liquidation value of $5.49k will be triggered
- Proposal intentionally reduces LT with 4-6% margin from more substantial liquidation thresholds to minimize but not eliminate liquidation impact
Generated by Kvorum
02Description
Simple Summary
A proposal to reduce Liquidation Thresholds on Aave V2 Ethereum.
Motivation
In continuation of the deprecation of Aave V2, Chaos Labs advises implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum.
As Liquidation Threshold reductions may lead to user accounts being eligible for liquidations upon their approval, we want to clarify the full implications to the community at each step. We will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution.
Our recommendations below suggest an LT configuration that optimizes reductions without significantly increasing the number of accounts eligible for liquidation. The proposed values are set at a margin of ~4-6% from the closest LT figure, which would trigger more substantial liquidations.
Specification
Aave v2 Ethereum
| Asset | Current LT | Chaos Rec LT | Value Liquidated ($) | Accounts Liquidated |
|---|---|---|---|---|
| CRV | 14% | 0.01% | 1.07k | 6 |
| LINK | 72% | 68% | 2.82k | 7 |
| MKR | 14% | 10% | 280 | 4 |
| UNI | 14% | 0.01% | 1.12k | 12 |
| ZRX | 8% | 5% | - | - |
| Value liquidated | Accounts liquidated | |
|---|---|---|
| Total | $5.49k | 31 |
References
- Implementation: AaveV2Ethereum
- Tests: AaveV2Ethereum
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal follows the standard Aave governance execution pattern: the on-chain action is a single execute() call to a dedicated payload contract, rather than individually decoded parameter-setting calls (e.g., configureReserveAsCollateral). This is consistent with the linked implementation contract (AaveV2Ethereum_EthereumV2LTReductions.sol) referenced in the description, which is the canonical way Aave codifies these LT changes. Because the calldata only shows the outer execute() call and not the internal logic of the payload contract, I cannot directly verify that the specific LT values (CRV 0.01%, LINK 68%, MKR 10%, UNI 0.01%, ZRX 5%) match what's encoded inside the payload. However, there is no evidence of a mismatch, target redirection, or extra/omitted actions — the single action target and pattern align with what a legitimate LT-reduction proposal of this type would look like. Given the opacity of the payload contract's internals from this calldata alone, confidence in a full value-level comparison is low, but nothing here suggests a discrepancy between the stated intent and the on-chain action structure.
Generated by Kvorum
04Actions
- Target
- 0x3e7b…5097
- 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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