[ARFC] Risk Parameters for DAI Update
Vote Result: YES - CONSERVATIVE
Rationale
The conservative option is more prudent based on Chaos Labs’ analysis since the theoretical implied D3M risks are modest at its current scale. However, there is a need to change parameters due to this move by MakerDAO and Ethena does pose risks. The methodology to reduce LTV by 12% linearly since the maximum implied % of total DAI backing by sUSDe is 12% seems logical to us. Linearly reducing LTV as total DAI backing by sUSDe increases is also sensible. Reducing LT gradually also makes sense and avoids unnecessary liquidations while giving the community time to react with advance notice. The aggressive option does not make sense since temporarily reducing LTV to 0% does not hold much value, and reducing LT by 2% immediately is quite a drastic move given the analysis presented.
Therefore, we will vote YES in favour of the CONSERVATIVE option.