Chaos Labs V2 Ethereum and Polygon LT Reductions
01Summary
Proposal to reduce Liquidation Thresholds (LT) on frozen assets across Aave V2 Ethereum and Polygon as part of the V2 deprecation framework. On Ethereum, 19 assets will have LT reduced (e.g., CVX from 24% to 0.05%, MANA from 29% to 0.05%), affecting ~103 accounts with ~$106K in liquidations. On Polygon, 6 assets will have LT reduced to 0.05% (e.g., SUSHI, DPI, BAL, CRV, GHST, LINK), affecting ~69 accounts with ~$15.6K in liquidations. Total potential liquidations: ~$121.6K across 172 accounts.
- Type
- parameter change
Key changes
- CVX Liquidation Threshold reduced from 24% to 0.05% on Ethereum, affecting 2 accounts with $33.24K in liquidations(high)
- MANA Liquidation Threshold reduced from 29% to 0.05% on Ethereum, affecting 13 accounts with $25.55K in liquidations(high)
- YFI Liquidation Threshold reduced from 32% to 0.05% on Ethereum, affecting 10 accounts with $20.24K in liquidations(high)
- SNX Liquidation Threshold reduced from 30% to 0.05% on Ethereum, affecting 20 accounts with $10.55K in liquidations(high)
- GHST Liquidation Threshold reduced from 40% to 0.05% on Polygon, affecting 10 accounts with $7.7K in liquidations(high)
- LINK Liquidation Threshold reduced from 65% to 0.05% on Polygon, affecting 26 accounts with $6.6K in liquidations(high)
- ENJ, REN, and ZRX Liquidation Threshold reductions on Ethereum with combined ~$6.88K in liquidations(medium)
- Multiple additional assets on both chains with minor LT reductions (1% to 0.05% or fractional changes) with minimal liquidation impact(low)
Notable concerns
- Approximately 172 user accounts across both chains will become eligible for liquidation upon approval
- ~$121.6K in total value is at risk of liquidation
- Proposal explicitly acknowledges need for community communication about affected accounts before on-chain execution
- Aggressive deprecation approach targets multiple assets simultaneously, creating compounded liquidation risk
Generated by Kvorum
02Description
Simple Summary
A proposal to reduce Liquidation Thresholds on Aave V2 Ethereum and Polygon.
Motivation
Following the v2 deprecation framework, Chaos Labs and Gauntlet advise implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum and Polygon
As Liquidation Threshold reductions may lead to user accounts being eligible for liquidations upon their approval, we want to clarify the full implications to the community at each step. We will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution.
The full governance post can be found here
Specification
Chaos and Gauntlet align on the aggressive approach to expedite the deprecation of several assets on V2, with a potential for ~$120K in total value eligible for liquidation, at the time of posting this proposal
Aave v2 Ethereum
| Asset | Current LT | Chaos Rec LT | Value Liquidated ($) | Accounts Liquidated |
|---|---|---|---|---|
| CRV | 30% | 25% | 126 | 1 |
| CVX | 24% | 0.05% | 33.24K | 2 |
| DPI | 5% | 0.05% | - | - |
| ENJ | 44% | 0.05% | 4.64K | 14 |
| ENS | 38% | 30% | 2.7K | 9 |
| LINK | 80% | 75% | 3.63K | 9 |
| MANA | 29% | 0.05% | 25.55K | 13 |
| MKR | 28% | 26% | 72 | 2 |
| REN | 18% | 0.05% | 2.24K | 6 |
| SNX | 30% | 0.05% | 10.55K | 20 |
| UNI | 55% | 40% | 2.16K | 14 |
| YFI | 32% | 0.05% | 20.24K | 10 |
| ZRX | 24% | 18% | - | - |
| 1INCH | 1% | 0.05% | - | - |
| BAL | 1% | 0.05% | - | - |
| BAT | 1% | 0.05% | - | - |
| KNC | 1% | 0.05% | - | - |
| FEI | 1% | 0.05% | - | - |
| xSUSHI | 1% | 0.05% | - | - |
| Value liquidated | Accounts liquidated | |
|---|---|---|
| Total | $106,024 | 103 |
Aave v2 Polygon
| Asset | Current LT | Chaos Rec LT | Chaos Rec LTV | Value Liquidated ($) | Accounts Liquidated |
|---|---|---|---|---|---|
| SUSHI | 45% | 0.05% | 0% | 13 | 3 |
| DPI | 45% | 0.05% | 0% | 40 | 2 |
| BAL | 45% | 0.05% | 0% | 1.2K | 15 |
| CRV | 45% | 0.05% | 0% | 127 | 11 |
| GHST | 40% | 0.05% | 0% | 7.7K | 10 |
| LINK | 65% | 0.05% | 0% | 6.6K | 26 |
| Value liquidated | Accounts liquidated | |
|---|---|---|
| Total | $15,600 | 69 |
References
- Implementation: AaveV2Ethereum, AaveV2Polygon
- Tests: AaveV2Ethereum, AaveV2Polygon
- Snapshot: Direct-to-AIP
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal describes granular per-asset Liquidation Threshold (and in Polygon's case, LTV) reductions across Aave v2 Ethereum and Polygon markets, referencing specific implementation payload contracts (AaveV2Ethereum_ChaosLabsV2EthereumAndPolygonLTReductions and the Polygon equivalent) linked in the References section. The decoded on-chain actions do not directly show per-asset parameter changes; instead they show two calls to forwardPayloadForExecution on Aave's cross-chain governance forwarder, targeting chain id 1 and chain id 137 respectively, each pointing to a specific payload id and executor address. This is the standard, expected pattern for Aave governance proposals of this type: the top-level proposal only forwards execution to chain-specific payload contracts (already reviewed/tested per the linked Solidity and test files), which then perform the actual parameter updates. Since the calldata's structure (two forward calls, one per chain, matching the two markets discussed) aligns with the proposal's stated scope, and no unexpected targets, transfers, or extraneous actions are present, this is consistent with the description. Confidence is medium rather than high because the actual numeric LT/LTV values cannot be directly verified from these two forwarding calls alone — they rely on the referenced external payload contracts executing as tested, which is normal for this proposal pattern but limits on-chain verifiability of the exact percentages listed in the tables. No omissions, extra actions, or target mismatches were identified between the description and the decoded calldata given the expected structure of Aave v2 cross-chain deprecation proposals.
Generated by Kvorum
04Actions
- Target
- 0x9aee…2bc7
- Value
- 0 wei
- Function
- forwardPayloadForExecution((uint256,uint8,address,uint40))
- Arguments
{ "0": [ "1", "1", "0xdAbad81aF85554E9ae636395611C58F7eC1aAEc5", "36" ] }- Calldata
- Target
- 0x9aee…2bc7
- Value
- 0 wei
- Function
- forwardPayloadForExecution((uint256,uint8,address,uint40))
- Arguments
{ "0": [ "137", "1", "0x401B5D0294E23637c18fcc38b1Bca814CDa2637C", "20" ] }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
No forum thread is confidently linked to this proposal.
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