KVORUM
aaveSource: Aave governor v2 · #126

Risk Parameter Updates for Aave v2 Polygon

defeatedDec 1, 2022, 04:13 AM UTCby550x55b1…f262

01Summary

AISummary by Kvorumclaude-haiku-4-5

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
Contracts0x158a6bc04f0828318821bae797f50b0a1299d45bAave v2 Polygon PoolConfigurator
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

245 words

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

AIMismatch analysis by Kvorum

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

04Actions

1 total
#0execute(address)chain 0x1
Target
0x158a…d45b
Value
0 wei
Function
execute(address)
Arguments
{
  "0": "0xFACe5FAfB0b61F77a67D239b3d1c94f08536db62"
}
Calldata

05Tally

Summed from votes

Voters124
VP participating91.6K
Outcome (current)For
Current support100%

06Voters

124 total
Filter:
VoterChoice% of totalRationale
070x0703…961bFor90.1K98.30%—4y ago
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Showing 50

07Forum

AIForum synthesis by Kvorumclaude-haiku-4-5
sentiment · mixedthread · constructive

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
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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