Risk Parameter Updates for Aave v2 Polygon
01Summary
Proposal to reduce risk on Polygon Aave v2 by freezing GHST, BAL, and SUSHI reserves, and disabling borrowing on LINK, DPI, and CRV reserves in response to recent market volatility and liquidity contraction.
- Type
- parameter change
Key changes
- Freeze GHST, BAL, and SUSHI reserves to prevent new deposits and borrowing, allowing migration to Polygon v3 with enhanced risk tooling(high)
- Disable borrowing on LINK, DPI, and CRV reserves(high)
- Implement atomic execution that will unfreeze reserves if AIP-124 executes before this proposal(medium)
Notable concerns
- Proposal is designed to reduce risk profile across volatile assets in response to market contraction
- LTV and Liquidation Threshold changes for highly liquid assets may be required in future separate submission
- Implementation includes contingency logic to handle interaction with AIP-124
Generated by Kvorum
02Description
Simple Summary
In response to recent market events and the resulting discussion on the Aave governance forum regarding the Aave communities risk appetite, Llama and Chaos Labs proposes to make a series of parameter changes to the Polygon Aave v2 Liquidity Pool.
Abstract
We specifically recommend freezing for GHST, BAL and SUSHI as a risk-off approach as the community can utilise the asset on the Polygon v3 deployment with enhanced risk tooling, such as supply and borrow caps. Borrowing is to be disabled for LINK, DPI and CRV Reserves.
Motivation
In response to recent market events and the continued contraction of liquidity across markets, this proposal seeks to reduce the risk profile across many higher volatile assets.
It is likely, LTV and Liquidation Threshold (LT) for highly liquid assets will also require amending in the near future. This will be managed via a separate submission.
Specification
The following risk parameter proposal is presented below:

Implementation
This proposal will reconfigure the following asset Reserves:
- BAL
- CRV
- GHST
- LINK
- SUSHI
- DPI
This proposal is written in an atomic manner that will unfreeze reserves in case AIP-124 gets executed before.
To achieve this, freezeReserve(address asset), unfreezeReserve(address asset) and disableBorrowingOnReserve(address asset) will be performed via the PoolConfigurator for each asset respectively to ensure a predictable final state.
POOL_CONFIGURATOR.freezeReserve(address asset)
POOL_CONFIGURATOR.unfreezeReserve(address asset)
POOL_CONFIGURATOR.disableBorrowingOnReserve(address asset)
Implementation can be found here
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
A calldata-vs-description analysis is not generated yet. Review the decoded actions →
04Actions
- Target
- 0x158a…d45b
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0xFACe5FAfB0b61F77a67D239b3d1c94f08536db62" }- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 070x0703…961b | For | 90.1K | 98.30% | — | 4y ago |
| 8D0x8dd6…f976 | For | 1K | 1.13% | — | 4y ago |
| 490x49d2…4399 | For | 297 | 0.32% | — | 4y ago |
| B60xb6d8…8f54 | For | 140.3 | 0.15% | — | 4y ago |
| 320x329c…3ed4 | For | 23.5 | 0.03% | — | 4y ago |
| 240x2477…b7a8 | For | 20 | 0.02% | — | 4y ago |
| A00xa0ef…2d56 | For | 8.3 | 0.01% | — | 4y ago |
| FC0xfca9…46ca | For | 5 | 0.01% | — | 4y ago |
| C10xc1bd…a4c3 | For | 3.5 | 0.00% | — | 4y ago |
| 100x1045…09c4 | For | 3.2 | 0.00% | — | 4y ago |
| D40xd418…837c | For | 2.2 | 0.00% | — | 4y ago |
| E40xe4cc…f881 | For | 1.8 | 0.00% | — | 4y ago |
| 770x77ce…f42a | For | 1.4 | 0.00% | — | 4y ago |
| 100x106c…75bf | For | 1.1 | 0.00% | — | 4y ago |
| 320x3270…77fa | For | 1 | 0.00% | — | 4y ago |
| E50xe539…5708 | For | 1 | 0.00% | — | 4y ago |
| CE0xcebd…926e | Against | 1 | 0.00% | — | 4y ago |
| 9A0x9a37…ea65 | For | 1 | 0.00% | — | 4y ago |
| 7D0x7da0…fb01 | For | 1 | 0.00% | — | 4y ago |
| 720x72bc…a6b2 | For | 1 | 0.00% | — | 4y ago |
| E60xe696…aab8 | For | 0.7 | 0.00% | — | 4y ago |
| 0D0x0d9d…9ff1 | For | 0.6 | 0.00% | — | 4y ago |
| FC0xfcd0…3714 | For | 0.6 | 0.00% | — | 4y ago |
| 8F0x8fc6…3246 | For | 0.6 | 0.00% | — | 4y ago |
| 6B0x6be2…b1ff | Against | 0.5 | 0.00% | — | 4y ago |
| 5B0x5b19…9864 | Against | 0.5 | 0.00% | — | 4y ago |
| 890x89d9…8978 | For | 0.4 | 0.00% | — | 4y ago |
| F80xf8b8…5d96 | For | 0.3 | 0.00% | — | 4y ago |
| C10xc16b…c1b3 | For | 0.3 | 0.00% | — | 4y ago |
| 910x9188…c834 | For | 0.3 | 0.00% | — | 4y ago |
| D40xd41c…6666 | For | 0.3 | 0.00% | — | 4y ago |
| 470x4712…ac60 | For | 0.3 | 0.00% | — | 4y ago |
| DC0xdc00…1b7c | For | 0.2 | 0.00% | — | 4y ago |
| 7E0x7e52…9706 | For | 0.2 | 0.00% | — | 4y ago |
| DB0xdb95…5aac | For | 0.2 | 0.00% | — | 4y ago |
| B50xb556…8dee | For | 0.2 | 0.00% | — | 4y ago |
| D50xd509…9efc | For | 0.2 | 0.00% | — | 4y ago |
| 8C0x8c15…fbca | For | 0.2 | 0.00% | — | 4y ago |
| 9A0x9a88…6e27 | For | 0.2 | 0.00% | — | 4y ago |
| C20xc276…1399 | For | 0.2 | 0.00% | — | 4y ago |
| 050x05f7…946c | For | 0.2 | 0.00% | — | 4y ago |
| AC0xacbf…3e25 | For | 0.2 | 0.00% | — | 4y ago |
| DD0xdd6d…fefa | For | 0.2 | 0.00% | — | 4y ago |
| 860x86e0…fea9 | For | 0.2 | 0.00% | — | 4y ago |
| D70xd7b2…4489 | For | 0.2 | 0.00% | — | 4y ago |
| 170x17eb…0fe0 | For | 0.2 | 0.00% | — | 4y ago |
| 550x5574…2bf8 | For | 0.2 | 0.00% | — | 4y ago |
| 7D0x7d55…b6f6 | For | 0.1 | 0.00% | — | 4y ago |
| 300x3043…4fa6 | For | 0.1 | 0.00% | — | 4y ago |
| 320x3279…3a5b | For | 0.1 | 0.00% | — | 4y ago |
07Forum
- [ARC] Risk Parameter Recommendations for Aave V2 ETH (2022-11-22) ↗discourse · high confidence
Arguments for
- Freezing long-tail assets provides immediate risk mitigation across multiple attack vectors without triggering liquidations of existing healthy user positions.— Pauljlei, MarcZeller, kakagri, lbsblockchain
- The CRV attack demonstrated that traders are willing to risk substantial capital unprofitably, fundamentally changing the security threshold and justifying a more conservative approach.— Pauljlei, tarun, Alex_BertoG, lbsblockchain
- Freezing tail assets that represent only ~5% of V2 TVL but pose disproportionate risk is a reasonable tradeoff to de-risk the protocol ahead of V3 migration.— Pauljlei, fig, lbsblockchain, kakagri
- V3's risk controls (supply caps, borrow caps, isolation mode) will enable more granular and safer management of these assets once deployed.— Pauljlei, MarcZeller, fig, lbsblockchain
- Freezing avoids the need for broad reductions in liquidation thresholds on major assets like USDC/DAI, which would trigger liquidations and harm healthy users.— Pauljlei, omergoldberg, tarun, lbsblockchain
Arguments against
- A blanket freeze is overly conservative and lacks surgical precision; disabling borrowing on volatile assets while keeping supply side intact is more proportionate.— eboado, Llamaxyz, TokenBrice, Figue
- The root cause of the CRV attack was excessive USDC liquidation threshold (89%), not the presence of CRV itself; lowering major asset LTs is the more targeted fix.— eboado, TokenBrice, tarun
- Freezing assets like stablecoins (GUSD, LUSD, USDP) and assets without borrowing enabled is unnecessary given their lower inherent risk and peg mechanisms.— eboado, monet-supply, TokenBrice, michwill
- Freezing may harm Aave's perception and competitiveness in DeFi by signaling weakness compared to competitors and reducing protocol adoption.— Figue, DTBAEE
- Freezing tail assets without addressing the underlying risk parameter issues on major collateral is incomplete and doesn't solve the systemic problem.— eboado, stani, michwill
Unresolved concerns
- Whether reducing liquidation thresholds on USDC and DAI is necessary and, if so, what magnitude of reduction balances risk mitigation against user liquidations.— eboado, omergoldberg, yaron
- Unclear what the community's actual risk tolerance and security budget should be for tail assets going forward, which should guide parameter decisions.— tarun, Alex_BertoG
- Whether disabling borrowing (less conservative) versus freezing (more conservative) is the appropriate response, given disagreement among risk providers and the DAO.— eboado, Llamaxyz, Callen_Wintermute
- Lack of clear timeline for V3 Ethereum deployment, making it uncertain how long V2 assets will remain frozen and whether migration incentives will work.— fig
Notable participants
- PauljleiGauntlet risk analyst who proposed the initial freeze of 17 long-tail assets and provided detailed risk rationale throughout discussion.
- eboadoBGD contributor who provided detailed asset-by-asset risk analysis and pushed back against the blanket freeze, advocating for more granular parameter adjustments.
- tarunGauntlet principal who clarified the security budget framework and justified the freeze as preferable to across-the-board LT reductions on major assets.
- LlamaxyzRisk provider who acknowledged over-conservatism in the initial proposal and led effort to develop an alternative 'disable borrowing' proposal as middle ground.
- omergoldbergChaos Labs analyst who quantified liquidation impacts of LT reductions and proposed consensus parameters to disable borrowing instead of freezing.
- MarcZellerAave core contributor who supported the proposal as conservative risk mitigation and opportunity to encourage V3 adoption.
- monet-supplyCommunity risk analyst who identified specific stablecoins (GUSD, USDP, LUSD) with strong peg mechanisms that may not warrant freezing.
- AaveLabsCore team that signaled support for community-led risk response following the CRV incident.
- staniAave co-founder who ultimately voted for the freeze proposals while acknowledging merit in a more granular alternative approach.
- bgdlabsBGD team that provided technical clarity on V3 deployment timeline and governance proposal execution mechanics.
Generated by Kvorum
08Similar proposals
- aaveexecutedRisk Parameter Updates for Aave v2 Ethereum Liquidty Pool90%
- aaveexecutedFreeze and set LTV to 0 for DPI, BAL, CRV, and SUSHI on Aave v3 Polygon, 2024.01.1978%
- aaveexecutedRisk Parameter Updates for Aave V2 AMM Market (2023-03-31)78%
- aavedefeatedRisk Parameter Updates for Aave V2 AMM Market (2023-03-29)77%
- aaveexecutedAave v2 non-Ethereum pools next deprecation steps76%
- aaveexecutedAllow Emergency Admin to freeze on Aave V275%
- aaveexecutedRisk Parameter Updates for Aave V2 ETH Market (2022-11-22)75%
- aaveexecutedDisable borrow for xSUSHI and DPI. Freeze reserves for UNI and BAL AMM Markets75%
- aaveexecutedChaos Labs V2 to V3 Migration Next Steps74%
- aaveexecutedTemporary Freeze of Long-Tail V2 Assets74%