The last few months the market has been evolving fast and so have the risks so here is a risk update. Lets focus on $AAVE and $LINK:
In the last month, $AAVE’s market metrics have significantly improved with the daily volume now around $500m nearly matching the $560m of $AAVE on Aave. Liquidity Risk Score is B-
$LINK on the other hand has around $2b of daily volume largely able to handle liquidations of the $680m of $LINK on Aave. Liquidity Risk Score is B+
Historically $AAVE token has been subject to more volatility than $LINK, emphasized by the difference in market capitalisation. This seems to have shifted in the last month, with $LINK showing more volatility than $AAVE and both volatility risk ratings now at C. This change is very recent as last week $AAVE still had a volatility rating of C-.
You have correctly identified, significant improvements in $AAVE’s metrics this month, with risks reducing towards the levels of $LINK but not quite there yet. Increasing $AAVE’s LTV and Liquidation Threshold LT to the levels of $LINK seems a bit premature.
The Risk Team suggests to wait for Gauntlet’s Market Risk recommendations or reassess next month, to optimise the risk parameters once the market metrics have stabilised.