BAL Interest Rate Upgrade
01Summary
Proposal to increase BAL interest rate parameters across all Aave deployments (Polygon and Ethereum, v2 and v3) by raising the Base rate from 3% to 5% and Slope1 from 14% to 22%, resulting in approximately a 10% increase to the borrow rate at Uoptimal point (from 17% to 27% APY). This is the second stage of gradual rate increases in response to strong borrowing demand for BAL.
- Type
- parameter change
Key changes
- Increase Base rate from 3% to 5%(high)
- Increase Slope1 from 14% to 22%(high)
- Increase Base Stable Rate Offset from 2% to 5%(medium)
- Set Stable Slope1 to 22% (previously 0%)(medium)
- Maintain Uoptimal at 80%, Slope2 at 150%, and other parameters unchanged(low)
Notable concerns
- BAL utilization on Polygon v3 is at 77.34%, approaching the Uoptimal threshold of 80%
- Competing yield opportunities exist: Tetu offering 88.77% APY and Aura offering 58.21% APY on B-80BAL-20WETH, both significantly above the new proposed borrow rates
- Market response to the previous rate increase from 7% to 17% APY has not been fully detailed in the proposal
- Gradual approach means rates may be increased further depending on market response
Generated by Kvorum
02Description
Summary
This publication proposes amending the BAL interest rate parameters across all BAL Reserves.
Abstract
Previously, Aave implemented the first stage of increasing the BAL interest rate across all deployments. This was performed with the intention of monitoring the market response and revising the rates higher at a later date.
This publication presents the next BAL interest rate increase.
Motivation
At the time of writing the utilisation and borrowing rate for BAL on the Polygon v3 deployment is nearing the Uoptimal value, 80%. With utilisation at 77.34% and the borrow APY 17.98%, the market is signalling strong demand for borrowing BAL.
The table below presents the current APY for various tokenised B-80BAL-20WETH wrappers deposited into their respective liquidity pools:
| Description | APY | TVL | Network | |
|---|---|---|---|---|
| Aura Finance (Aura Gauge) | B-80BAL-20WETH / auraBAL | 58.21% | $21,380,000 | Ethereum |
| Tetu (Balancer Gauge) | B-80BAL-20WETH / tetuBAL | 88.77% | $10,220,000 | Polygon |
| Stake DAO (Balancer Gauge) | B-80BAL-20WETH / sdBAL | 18.25% - 45.35% | $637,221 | Ethereum |
The APY for each of the pools above exceeds the Uoptimal borrow rate APR, Base + Slope1, 17% APR or 18.53% APY, compounded interest rate over time. Previous commentary from Gauntlet supported a Base + Slope1 total of 40% at the time Aura Finance was offering around 60%. Tetu is deployed on Polygon and is currently offering a notably higher 88.77% yield for depositing and locking the B-80BAL-20WETH / tetuBAL.
Previous discussion within the community centred around increasing the borrowing rates gradually over time and monitoring the market's response.
The previous proposal increased the Borrow rate at the Uoptimal point from 7% to 17%. This publication seeks to increase the borrow rate by a similar 10%. This is to be achieved by increasing the Base from 3% to 5% and Slope1 from 14% to 22%. Pending how the market responds, this interest rate can be further increased. This approach keeps true to the previous communication of gradually increasing the borrow rates rather than all at once.
Specification
Update the following parameters as per below table:
| Parameter | Current (%) | Proposed (%) |
|---|---|---|
| Uoptimal | 80.00 | 80.00 |
| Base | 3.00 | 5.00 |
| Slope1 | 14.00 | 22.00 |
| Slope2 | 150.00 | 150.00 |
| Stable Borrowing | Disabled | Disabled |
| Stable Slope1 | 0.00 | 22.00 |
| Stable Slope2 | 0.00 | 150.00 |
| Base Stable Rate Offset | 2.00 | 5.00 |
| Stable Rate Excess Offset | 5.00 | 5.00 |
| Optimal Stable To Total Debt Ratio | 20.00 | 20.00 |
This is to be implemented across all BAL reserves, Polygon v2, v3, Ethereum v2 and v3.
Implementation
Payload for AAVE V3 Ethereum can be found here
Tests can be found here
Payload for AAVE V3 Polygon can be found here
Tests can be found here
Deployment script for interest rate strategy can be found here
Payload for AAVE V2 Polygon can be found here
Payload for AAVE V2 Ethereum can be found here
Tests can be found here
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal describes a single, well-scoped change: raising the Base and Slope1 (and corresponding Stable rate) parameters for the BAL interest rate strategy across four deployments (Polygon v2, Polygon v3, Ethereum v2, Ethereum v3), leaving Uoptimal, Slope2, and a few other parameters untouched. The decoded calldata contains exactly four top-level actions, matching the four deployments referenced in the Implementation section (four separate payload repositories are linked, one per market). Two actions are bare execute() fallback calls to distinct contracts, consistent with Aave's standard cross-chain bridge/forwarder pattern used to relay a Polygon-targeted payload from Ethereum governance. The other two are execute(address) calls to the Aave short executor, each pointing at a payload contract address, consistent with the Ethereum v2/v3 payload pattern described in the linked implementation code. None of the decoded actions transfer funds, grant roles, or target unrelated addresses, and the count and structure align with the four payloads referenced in the description. However, the decoded calldata does not expose the actual numeric parameters being set (Base, Slope1, Stable Slope1/2, etc.) since these are encoded inside the payload contracts' bytecode, not in the top-level calldata. This limits verification of the exact percentage values claimed in the Specification table, so confidence is medium rather than high. Given the structural match (four actions for four markets, standard bridge/executor pattern, no unexplained recipients or extra actions) and no ability to detect a contradicting value, I find no discrepancy to flag under conservative reporting standards.
Generated by Kvorum
04Actions
- Target
- 0xeb7d…0b14
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
- Target
- 0x5852…6070
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
- Target
- 0x158a…d45b
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0xfb2a7eB134fA2D03d9A2C8FE0a9758132Fe15357" }- Calldata
- Target
- 0x158a…d45b
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0x918c0cd8291C687176029D1F2296a17E63eD3c83" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- [ARFC] BAL Interest Rate Upgrade ↗discourse · medium confidence
Arguments for
- BAL utilization on Polygon v3 is approaching the optimal threshold (77.34%) with strong borrowing demand signaled by 17.98% borrow APY, justifying a rate increase.— Llamaxyz
- Competitors like Tetu (88.77% APY) and Aura Finance (58.21% APY) offer substantially higher yields on BAL-WETH wrappers, indicating Aave's rates are uncompetitive and need adjustment.— Llamaxyz
- The gradual 10% increase in borrow rates (Base from 3% to 5%, Slope1 from 14% to 22%) maintains continuity with previous iterative approach and allows monitoring of market response before further adjustments.— Llamaxyz
Arguments against
None surfaced.
Notable participants
- LlamaxyzProposal author who presented the BAL interest rate upgrade with detailed market analysis and rationale.
- PauljleiGauntlet representative who acknowledged the proposal without raising objections or concerns.
Generated by Kvorum
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