OP Risk Parameters Update
01Summary
This AIP activates OP as a borrowable asset in Aave V3 on Optimism by removing isolation mode and setting risk parameters. OP now has a 10M supply cap, 500k borrow cap, 30% LTV, and conservative interest rate parameters, enabling new yield opportunities for suppliers and borrowers while maintaining risk controls.
- Type
- parameter change
Key changes
- Remove isolation mode for OP asset to allow borrowing(high)
- Set supply cap at 10M OP(high)
- Set borrow cap at 500k OP(high)
- Set LTV at 30% and liquidation threshold at 40%(high)
- Set liquidation penalty at 10% with 10% protocol fee(medium)
- Disable stable borrow for OP(medium)
- Set base variable rate at 0% with slope1 at 7% and slope2 at 300%(medium)
- Set optimal ratio at 45% and reserve factor at 20%(medium)
Notable concerns
- High slope2 rate of 300% may create extreme borrowing costs at high utilization
- Parameters still require community validation through post-implementation market data collection
Generated by Kvorum
02Description
Simple Summary
This AIP proposes the activation of OP as a borrowable asset in the Aave V3 Optimism pool. The aim is to adapt to the maturity of the L2 and attract more suppliers and borrowers, thereby generating new revenue for the protocol.
Motivation
The Aave OP V3 market is one of the Aave V3 L2 deployments, with OP being the native asset of the OP L2. At its inception, the L2 was in its early stages, leading to the onboarding of OP with conservative parameters due to nascent liquidity & infrastructure.
As the L2 has matured, the ACI proposes less conservative parameters for the OP asset. By removing the isolation mode for OP and allowing its borrowing, we anticipate attracting more suppliers who can earn a yield on their OP deposits and new borrowers who can use OP to borrow additional assets. This will also generate new revenue for the protocol.
While the proposed changes are less conservative, they still maintain strict supply, borrow caps, and a conservative interest rate strategy. This ensures that the DAO promotes growth and new opportunities while remaining risk-averse. Based on the collected market data post-implementation, the community will have the opportunity to revisit these parameters at a later stage.
Specification
- Asset: OP
- OP Contract Address: 0x4200000000000000000000000000000000000042
New Risk Parameters:
| Parameter | Value |
|---|---|
| Asset | OP |
| Supply Cap | 10M |
| Borrow Cap | 500k |
| Loan To Value (LTV) | 30% |
| Liquidation Threshold (LT) | 40% |
| Liquidation Penalty (LP) | 10% |
| Liquidation Protocol Fee (LPF) | 10% |
| Stable Borrow | Disabled |
| Base Variable Rate | 0% |
| Slope1 | 7% |
| Slope2 | 300% |
| Optimal Ratio | 45% |
| Reserve Factor (RF) | 20% |
References
- Implementation: Optimism
- Tests: Optimism
- Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal description lays out a detailed and internally consistent set of new risk parameters for OP on Aave V3 Optimism (caps, LTV, LT, LP, LPF, interest-rate curve, isolation-mode removal, borrowing enablement). This matches the standard pattern used in Aave AIPs: the on-chain action decoded here is a single execute(address) call, which is characteristic of Aave's governance flow where the top-level proposal invokes a payload/executor contract that itself contains the granular setter calls (e.g., setSupplyCap, setBorrowCap, setReserveFactor, etc.) for the target market. Because only the top-level execute() call was decoded and the target payload contract's internal logic is not expanded in the provided calldata, it is not possible to directly verify that the numeric parameters in the description (10M supply cap, 500k borrow cap, 30% LTV, etc.) match what the payload contract actually sets. However, there is nothing in the decoded action that contradicts the description — the pattern is exactly what is expected for this proposal type (a reference to the same implementation file is provided in the description's References section), and no red flags (unexpected recipient, fund transfer, or role grant) are visible. Given the lack of deeper visibility into the payload contract's internal calls, confidence in this comparison is low, but there is no evidence of intentional misrepresentation or a mismatch between prose and calldata within the scope of what was decoded.
Generated by Kvorum
04Actions
- Target
- 0x5f5c…6711
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0xe704Efe305b14BDDbba3d6C7f4A559149EdC1339" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
No forum thread is confidently linked to this proposal.
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