[ARFC] Aave V3 Deployment on BNB Chain

Gauntlet Risk Analysis

For our recommendations for the initial deployment on BSC, we consider a few main metrics for BNB, BTCB, WETH, USDC, USDT, CAKE, and BETH following our asset listing methodology.

Five of the six proposed assets have significant liquidity on BSC. BETH is the exception, with a 25% depth of less than $1M. We recommend that Aave V3 launch on BSC with BNB, BTCB, WETH, USDC, USDT, and CAKE as the initial assets, and wait to list BETH pending both the Shanghai upgrade and greater on-chain liquidity for the token.

A note on bridged assets

Some assets have multiple bridged versions on the BNB chain. For instance, there’s Binance-Peg USDC and also anyUSDC, both of which have significant on-chain market caps ($779M and $4.9M). We recommend the Binance-Peg version of all bridged tokens, as these are the versions with the highest circulating liquidity in all cases.

For the sake of clarity, here are all the token addresses we use in our analysis:

Recommended Initial Parameters

Isolation Mode YES NO NO NO NO NO
Borrowable in Isolation NO NO NO NO YES YES
Enable Collateral YES YES YES YES YES YES
Emode Category N/A N/A N/A N/A N/A N/A
Loan To Value 55.00% 70.00% 70.00% 80.00% 74.00% 75.00%
Liquidation Threshold 61.00% 75.00% 75.00% 82.50% 76.00% 80.00%
Liquidation Bonus 10.00% 10.00% 10.00% 10.00% 5.00% 5.00%
Reserve Factor 20.00% 20.00% 20.00% 15.00% 10.00% 10.00%
Liquidation Protocol Fee 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Borrow Cap 1,800,000 42,000 191 12,000.00 20,000,000* 20,000,000*
Supply Cap 5,300,000 46,000 372 12,000.00 50,000,000* 50,000,000*
Debt Ceiling $10,000,000 N/A N/A N/A N/A N/A
Stable Borrowing NO NO NO NO NO NO
uOptimal 45% 45% 45% 80% 90% 80%
Base 0% 0% 0% 1% 0% 0%
Slope1 7% 7% 7% 3.80% 4% 4%
Slope2 300% 300% 300% 80% 60% 75%

Borrow and Supply Caps

For initial supply and borrow caps, we use the lower of the conservative and aggressive recommendations generated under Gauntlet’s Borrow and Supply Cap Methodology.

*For USDT and USDC, our standard methodology would actually support higher caps than those in the proposal, but we cap them at 20M borrow cap and 50M supply cap.

Enable Borrowing

We recommend enabling borrowing for BTCB, ETH, USDC, and USDT. Conservative borrow caps are sufficient to mitigate the risk from borrowing.

Liquidation Threshold, Loan to Value, Isolation Mode

For BTCB, ETH, USDC, and USDT, we use the most conservative (lowest) LB and LTV of those assets on other chains.

BNB and CAKE are new assets. BNB, the native token of the BNB chain, is the 4th largest token by market cap, after BTC, ETH, and USDT, with a market cap of $49B. It has very significant on-chain liquidity, with a 25% depth of $65M. We recommend initially setting LT and LTV to 70% and 65% respectively, as a conservative starting point.

CAKE is the token for PancakeSwap, the leading DEX on the BNB chain. It is used for governance and staking. The CAKE token has substantial on-chain liquidity, with a 25% depth of $33M. CRV is a relevant comparable to CAKE, as both are DEX tokens with similar market caps ($686M for CAKE, $793M for CRV). CRV is listed on Ethereum Mainnet in isolation mode with LTV of 55% and LT of 61%. We recommend the same parameters for CAKE: isolation mode on, with LTV = 55% and LT = 1%. We recommend an initial debt ceiling of $10M for CAKE. Please see here for Gauntlet’s Isolation Mode methodology.

Liquidation Bonus

We recommend setting LB to 5% for stablecoin assets and 10% for non-stablecoin assets.

Reserve Factor

We recommend using the same Reserve Factors used on other chains for BTCB, ETH, USDC, and USDT. For the new tokens, BNB and CAKE, we recommend starting at 20%.

Interest Rate Curves

We recommend setting the interest rate curves for existing assets to the same values they have on other chains. For the new assets, BNB and CAKE, we recommend starting with the IR curves used for BTCB, as these are relatively conservative.

Borrowable in Isolation

We recommend allowing users to borrow the stablecoins, USDT and USDC, in isolation mode.

Supporting Data


Token 25% Depth (BNB Chain) 2% Depth (Combined CEX and DEX)
BNB $61,000,000 $11,000,000
BTCB $28,000,000 $3,400,000
WETH $23,000,000 $41,000,000
USDC $72,000,000 $150,000,000
USDT $75,000,000 $620,000,000
CAKE $18,000,000 $4,700,000
BETH $970,000 $290,000

25% depth figures reflect liquidity on Binance chain and are sourced from 1inch; we use USDC as the target currency for USDT, and USDT as the target currency for the other assets. 2% depth figures reflect liquidity across CEX and DEX sources and are sourced from Coingecko.


Token Circulating Supply (tokens) Net Top 5 Holders (tokens) Net Top 5 (% of Circulating Supply)
BNB 157,887,643 1,094,697 0.69%
BTCB 53,056 36,635 69.05%
WETH 120,457,776.00 275,982 0.23%
USDC 32,619,068,875 340,728,033 1.04%
USDT 80,004,564,803 525,953,021 0.66%
CAKE 380,101,073 319,053,004 83.94%
BETH 1,499,971 1,490,864 99.39%