KVORUM
aaveSource: Aave governor v2 · #240

Add LUSD to Arbitrum Aave V3

defeatedJun 12, 2023, 01:38 PM UTCby550x55b1…f262

01Summary

AISummary by Kvorumclaude-haiku-4-5

Proposal to add LUSD, a decentralized ETH-backed stablecoin, to Aave Arbitrum v3 as a borrowable asset with collateral disabled (LTV 0%). LUSD is already listed on Ethereum and Optimism deployments. Parameters include 900,000 unit supply and borrow caps, variable interest rates starting at 0%, and a 10% reserve factor.

Type
protocol addition

Key changes

  • Add LUSD token to Aave v3 Arbitrum as a borrowable asset(high)
  • Set collateral disabled (LTV 0%) - LUSD cannot be used as collateral(high)
  • Set supply cap and borrow cap at 900,000 units each(medium)
  • Variable borrowing enabled with base rate 0%, slope1 4%, slope2 87%(medium)
  • Reserve factor set to 10%(medium)
  • Stable borrowing disabled(low)

Notable concerns

  • LUSD uses cross-network bridges for arbitrage on Arbitrum and Optimism, creating dependency on bridge security
  • Collateral disabled status limits utility as borrowing-only asset
Contracts0x93b346b6BC2548dA6A1E7d98E9a421B42541425b0x0411D28c94d85A36bC72Cb0f875dfA8371D8fFfF
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

395 words

Summary

This publication presents the community with the opportunity to add LUSD to Aave Arbitrum v3.

Abstract

LUSD is decentralised stable coin backed by ETH that is minted on the non-custodial, immutable, and governance-free, Liquidity Protocol.

Adding LUSD to Arbitrum will promote stable coin diversity. All Liquidity Protocol contracts are immutable, which makes LUSD the most trustless stablecoin available.

This publication proposes listing LUSD with collateral disabled (LTV 0%) with borrowing enabled.

Motivation

LUSD is currently listed on the following Aave deployments:

  • Ethereum V3
  • Ethereum V2
  • Optimism V3

This publication seeks to list LUSD on Aave v3 Arbitrum.

Past publications, which can be found here and here, provide insight and context.

LUSD brings more stable coin diversity to the Aave Protocol and will further empower the support for decentralized stablecoins. The LUSD stable coin mechanism is relatively simple and is in line with the risk averse ethos of the Aave Community.

LUSD is overcollateralised by ETH with two main mechanisms helping it keep its peg:

  • LUSD can be redeemed for ETH at face value (i.e., 1 LUSD for $1 of ETH).
  • Minimal collateral ratio of 110%.

Both mechanisms respectively create a price floor and ceiling through arbitrage opportunities.

LUSD on Arbitrum and Optimism relies on users transferring LUSD through each networks respective bridge to arbitrage the price variation across the networks.

This proposal aims to add LUSD as a borrowable asset (LTV 0%).

Specification

The parameters shown below are the combined recommendation of Gauntlet and Chaos Labs.

Ticker: LUSD

Contract Address: 0x93b346b6BC2548dA6A1E7d98E9a421B42541425b

Chainlink Oracle LUSD/USD 0x0411D28c94d85A36bC72Cb0f875dfA8371D8fFfF

ParameterValue
Isolation ModeNo
BorrowableYes
Collateral EnabledNo
Supply Cap900,000 units
Borrow Cap900,000 units
Debt Ceiling0
LTVNA
LTNA
Liquidation BonusNA
Liquidation Protocol FeeNA
Variable Base0.00%
Variable Slope14.00%
Variable Slope287.00%
Uoptimal80.00
Reserve Factor10.00%
Stable BorrowingDisabled
Stable Slope14.00%
Stable Slope287.00%
Base Stable Rate Offset1.00%
Stable Rate Excess Offset8.00%
Optimal Stable To Total Debt Ratio20.00%

Implementation

A list of relevant links like for this proposal:

The proposal Payload was reviewed by Bored Ghost Developing.

Disclaimer

@llamaxyz and contributor, @TokenLogic, are not associated with or compensated by Liquity for publishing this AFRC.

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorumlow confidenceclaude-sonnet-5
Consistent

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Generated by Kvorum
model: claude-sonnet-5
provider: anthropic
profile: anthropic-strong-v1
prompt: v1.0
generated: 2mo ago
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04Actions

1 total
#0execute(address)chain 0x1
Target
0xd1b3…cfa3
Value
0 wei
Function
execute(address)
Arguments
{
  "0": "0x98Bc9dfA3cEcB37F1bdeadc6e774d39082756B19"
}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total

No votes recorded yet.

07Forum

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

Arguments for

  • LUSD is a trustless, decentralized stablecoin backed by ETH with immutable, governance-free contracts, providing the most trustless stablecoin option available on Aave.— Llamaxyz
  • Adding LUSD to Arbitrum v3 promotes stablecoin diversity and aligns with Aave's risk-averse ethos by expanding decentralized stablecoin support.— Llamaxyz
  • LUSD's peg-maintenance mechanisms (redemption for ETH at face value and 110% minimum collateral ratio) create reliable price stability through arbitrage incentives.— Llamaxyz
  • LUSD is already successfully listed on Ethereum v3, Ethereum v2, and Optimism v3, demonstrating market validation across multiple Aave deployments.— Llamaxyz

Arguments against

None surfaced.

Notable participants

  • LlamaxyzProposer of the LUSD Arbitrum v3 listing alongside TokenLogic.
  • ChaosLabsRisk analysis contributor who reviewed and supported the listing with proposed parameters.
  • GarrettPetersenGauntlet representative who provided cap methodology recommendations aligned with the proposal.
  • 0xkeyrock.ethCommunity member who solicited formal risk analysis from ChaosLabs.
  • TokenLogicCo-contributor to the proposal with Llamaxyz.
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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