ARC: Raise LTV and liquidation threshold for AVAX on Aave V3 markets on Avalanche
AVAX has been live on Aave V2 since October 2021, and live on Aave v3 since inception on March 13. Currently, AVAX is the most utilized non-stablecoin asset on Aave V3 on Avalanche. This proposal aims to increase capital efficiency for the market by increasing LTV to 70% and Liquidation threshold to 75%.
The table below shows the current relevant metrics for non-stablecoin assets and proposed changes to AVAX market:
|Asset||Total Supply||Total Borrow||Utilization||LTV||Proposed LTV||Liquidation Threshold||Proposed Liquidation Threshold|
|WETH||$129.5M||$8.8M||6.8%||80%||No change||82.5%||No change|
|WBTC||$83.7M||$3.8M||4.6%||70%||No change||75%||No change|
|LINK||$8.4M||$520K||6.2%||50%||No change||65%||No change|
|sAVAX||$11.3M||$0||0%||20%||No change||30%||No change|
|AAVE||$400k||$0||0%||60%||No change||70%||No change|
Current AVAX Market Data:
|Avg. Volume 1 month||$657M|
|Avg. Volume 3 month||$540M|
Market Cap is calculated using circulating supply.
Volume data is based on Coingecko’s historical volume data.
Increasing the LTV of AVAX by 5% will increase the capital efficiency of the current AVAX market by about $4.5M. This would bring the risk parameters for AVAX to be more in line with those of WETH and WBTC. Even without the increase, AVAX is the most utilized non-stablecoin asset on Avalanche Aave V3. Increasing the LTV and liquidation threshold will further contribute to a more active and efficient market on Avalanche.