KVORUM
aaveSource: Aave governor v2 · #78

Risk Parameter Updates for Aave V2 and Aave Arc (Fireblocks) 2022-05-26

defeatedJun 4, 2022, 03:26 AM UTCby680x683a…6c02

01Summary

AISummary by Kvorumclaude-haiku-4-5

Batch update of 11 risk parameters across 4 assets: LTV, Liquidation Threshold, and Liquidation Bonus adjustments for LINK, USDC, and WETH on Aave V2, plus LTV and Liquidation Threshold adjustments for USDC on Aave Arc. Changes align with community-chosen Moderate risk level and follow Gauntlet's simulation-based recommendations post-market downturn. Note: liquidation thresholds are being lowered for LINK and WETH.

Type
parameter change

Key changes

  • LINK (0x514910771AF9Ca656af840dff83E8264EcF986CA) - LTV: 67%, Liquidation Threshold: 75%, Liquidation Bonus: 10.5%(medium)
  • USDC (0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) on Aave Arc - Liquidation Threshold: 90% (0x2328), LTV: 88.5% (0x222e)(medium)
  • USDT (0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599) - LTV: 69%, Liquidation Threshold: 76%, Liquidation Bonus: 10.5%(medium)
  • WETH (0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2) - LTV: 81%, Liquidation Threshold: 83% (lowered), Liquidation Bonus: 10.4%(high)

Notable concerns

  • Liquidation thresholds being lowered for LINK and WETH may increase liquidation risk in those collaterals
  • These are the first parameter updates for Aave Arc market with limited historical data
  • Parameter changes follow post-crash market conditions that may not persist
Contracts0x311bb771e4f8952e6da169b425e7e92d6ac457560xace1d11d836cb3f51ef658fd4d353ffb3c301218
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

539 words

Simple Summary

A proposal to adjust nine (9) total risk parameters, including LTV, Liquidation Threshold, and Liquidation Bonus across three (3) Aave V2 assets.

In addition, this AIP proposes adjusting two (2) total risk parameters, including LTV and Liquidation Threshold, across one (1) Aave Arc (Fireblocks) asset.

Abstract

This proposal is a batch update of risk parameters to align with the Moderate risk level chosen by the Aave community. These parameter updates are a continuation of Gauntlet’s regular parameter recommendations. Following the recent market crash, our simulation engine has ingested the latest market data (outlined below) to recalibrate parameters for the Aave protocol. Please note that this set of parameter changes will be lowering liquidation threshold for LINK and WETH.

These parameter updates also represent Gauntlet's first set of parameter updates for the Aave Arc market.

Motivation

This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.

Gauntlet's parameter recommendations are driven by an optimization function that balances 3 core metrics: insolvencies, liquidations, and borrow usage. Parameter recommendations seek to optimize for this objective function. Our agent-based simulations use a wide array of varied input data that changes on a daily basis (including but not limited to asset volatility, asset correlation, asset collateral usage, DEX / CEX liquidity, trading volume, expected market impact of trades, and liquidator behavior). Gauntlet's simulations tease out complex relationships between these inputs that cannot be simply expressed as heuristics. The individual collateral pages on the Gauntlet Risk Dashboard cover other key statistics and outputs from our simulations that can help with understanding interesting inputs and results related to our simulations.

Aave V2 Parameter Changes Specification

Our recent market downturn report showed that many collaterals are resilient to insolvencies, as our simulation models have predicted. Gauntlet's simulation engine will continue to adjust risk parameters to drive increases in capital efficiency while maintaining protocol risk at safe levels.

Aave Arc (Fireblocks) Parameter Changes Specification

Our simulation platform indicates that increasing the capital efficiency of USDC collateral does not meaningfully increase the risk of insolvencies. Note that, on our dashboard, the Value at Risk (VaR) metric for Aave Arc is currently $0. This low risk of insolvencies is reflective of the fact that the majority of borrowing on the platform is collateralized by the same asset as the assets being borrowed. As lending market usage grows, our platform will continue to ingest up-to-date data, re-run risk simulations, and make future parameter change recommendations.

Risk Dashboard

The community should use Gauntlet's Aave V2 Risk Dashboard to better understand the updated parameter suggestions and general market risk in Aave V2. Gauntlet has also launched the Aave Arc Risk Dashboard.

Aave V2 Dashboard

Implementation

The proposal sets the liquidation bonus, LTV and liquidation threshold ratios by calling configureReserveAsCollateral on the LendingPoolConfigurator contract at 0x311Bb771e4F8952E6Da169b425E7e92d6Ac45756, using the address and parameters specific to each token.

The full list of parameter updates can be found in the forum.

Copyright

Copyright and related rights waived via CC0.

<sup>By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.<sup>

03Mismatch analysis

AIMismatch analysis by Kvorum

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

04Actions

4 total
#0configureReserveAsCollateral(address,uint256,uint256,uint256)chain 0x1
Target
0x311b…5756
Value
0 wei
Function
configureReserveAsCollateral(address,uint256,uint256,uint256)
Arguments
{
  "0": "0x514910771AF9Ca656af840dff83E8264EcF986CA",
  "1": "6700",
  "2": "7500",
  "3": "10500"
}
Calldata
#1configureReserveAsCollateral(address,uint256,uint256,uint256)chain 0x1
Target
0x311b…5756
Value
0 wei
Function
configureReserveAsCollateral(address,uint256,uint256,uint256)
Arguments
{
  "0": "0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599",
  "1": "6900",
  "2": "7600",
  "3": "10500"
}
Calldata
#2configureReserveAsCollateral(address,uint256,uint256,uint256)chain 0x1
Target
0x311b…5756
Value
0 wei
Function
configureReserveAsCollateral(address,uint256,uint256,uint256)
Arguments
{
  "0": "0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2",
  "1": "8100",
  "2": "8300",
  "3": "10400"
}
Calldata
#3queue(address[],uint256[],string[],bytes[],bool[])chain 0x1
Target
0xace1…1218
Value
0 wei
Function
queue(address[],uint256[],string[],bytes[],bool[])
Arguments
{
  "values": [
    "0"
  ],
  "targets": [
    "0x4e1c7865e7BE78A7748724Fa0409e88dc14E67aA"
  ],
  "calldatas": [
    "0x7c4e560b000000000000000000000000a0b86991c6218b36c1d19d4a2e9eb0ce3606eb48000000000000000000000000000000000000000000000000000000000000222e000000000000000000000000000000000000000000000000000000000000232800000000000000000000000000000000000000000000000000000000000028d2"
  ],
  "signatures": [
    ""
  ],
  "withDelegatecalls": [
    false
  ]
}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total
Filter:
VoterChoice% of totalRationale
5B0x5b3b…7c98For183.4K0.00%—5y ago
C10xc17c…64e1For103.3K0.00%—5y ago
AF0xafda…3a6eAgainst93.4K0.00%—5y ago
D20xd236…4fa6Against80K0.00%—5y ago
DD0xdd45…4cc5Against65.5K0.00%—5y ago
FE0xfec1…abbbAgainst28.30.00%—5y ago
EA0xea0e…362aFor3.40.00%—5y ago
870x87c5…869cFor20.00%—5y ago
830x8330…053aFor0.50.00%—5y ago
910x91f7…c276For0.50.00%—5y ago
CE0xce57…5231For0.20.00%—5y ago
D40xd441…8193For0.10.00%—5y ago
F60xf623…1742For0.10.00%—5y ago
4F0x4f49…95ccFor0.10.00%—5y ago
B30xb34c…759eAgainst00.00%—5y ago
CF0xcf3a…b9e8Against00.00%—5y ago
A20xa2e7…1870For00.00%—5y ago
330x33ce…9105For00.00%—5y ago
1A0x1a29…282aFor00.00%—5y ago
Showing 19

07Forum

No forum thread is confidently linked to this proposal.