[ARFC] Add USDP to Aave V3 Ethereum


This proposal presents Aave with the opportunity to onboard USDP in isolation mode to the Ethereum Aave V3 Market.


As part of the community efforts on the V2 to V3 migration, Chaos Labs proposed a multi-phased plan to promote V3 adoption. As per this plan, Chaos Labs proposes to list USDP on Aave V3 on Ethereum. USDP is currently listed on V2 Ethereum as a non-collateral asset.

Liquidity and Market Cap

When analyzing market cap and trading volumes of assets for listing, we look at data from the past 180 days. The average market cap of USDP over the past 180 days was ~$883M, and the average daily trading volume was ~$8.7M (CeFi & DeFi).

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Liquidation Threshold

Analyzing USDP price volatility over the past, we observed daily annualized volatility of 2.79% and 30-day annualized volatility of 1.63%. Considering this volatility and the history of USDP on other networks, we recommend an initial LT of 75%.

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We recommend listing USDP as borrowable, as we do not observe a significant risk to the protocol by allowing to borrow of USDP, as long as it is bound by a well-defined cap.

Debt Ceiling

Following Chaos Labs’ Isolation Mode Methodology, we recommend an initial debt ceiling of $3.3M. Under the methodology for Isolation Mode, we consider two levels of probabilities for extreme price drops - Medium-High and High. We estimate the probability of an extreme price drop for USDP as Medium-High. Given this debt ceiling, we do not identify a profitable attack vector under the current liquidity levels.

Supply Cap, Borrow Cap, and Liquidation Bonus

When evaluating the initial supply caps for migrated assets from Aave V2 Market, we carefully analyze the latest supply for the asset and consider it as the demand for supplying the asset. We then ensure that this amount is aligned with the current liquidity on-chain.

Furthermore, we take into account the debt ceiling calculated using our methodology and derive a supply cap that aligns with the debt ceiling. This approach is aimed at minimizing the risks associated with listing assets while ensuring that the supply cap is aligned with the overall liquidity of the platform and the potential risks that the asset might pose to the protocol.

Accordingly, We recommend a supply cap of 5M USDP and a borrow cap of 4M USDP.

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Given the concentrated liquidity of USDP, we recommend a 5% Liquidation Bonus.

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For the Reserve Factor, Liquidation Protocol Fee, and Interest Rate curves, we recommend aligning the parameters to the other stablecoins currently on Ethereum V3.


Ticker: USDP

Contract Address: 0x8E870D67F660D95d5be530380D0eC0bd388289E1


Parameter Value
Isolation Mode Yes
Borrowable Yes
Collateral Enabled Yes
Supply Cap (USDP) 5M
Borrow Cap (USDP) 4M
Debt Ceiling $3.3M
LTV 70.00%
LT 75.00%
Liquidation Bonus 5.00%
Liquidation Protocol Fee 10.00%
Variable Base 0.00%
Variable Slope1 4.00%
Variable Slope2 75.00%
Uoptimal 80.00%
Reserve Factor 10.00%
Stable Borrowing Disabled
Flahloanable Yes
Siloed Borrowing No
Borrowed in Isolation No

Next Steps

  1. If consensus is reached and the proposal is refined, submit the ARFC for a snapshot vote for final approval.
  2. If consensus is reached, submit an Aave Improvement Proposal (AIP) to onboard USDP on the Ethereum Aave V3 pool.


Copyright and related rights waived via CC0.

1 Like

We have published a Snapshot for the community to vote on.

Start Date: Thursday, Jun 8, 2023, 7:30 PM
End Date: Sunday, Jun 11, 2023, 7:30 PM

Thank you in advance for your participation in the vote.

The Snapshot above didn’t reach the necessary quorum and threshold for YAE votes. Therefore, we won’t be moving the proposal to AIP at this moment and will revisit this in the future if there’s a shift in community preference.

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