Summary
A proposal to adjust WBTC’s risk parameters.
Motivation
After discussions with the Llama Risk team, we have merged our previous post with this one and consolidated our proposal to present a unified specification for the Aave community’s consideration.
Supply and Borrow Caps
We propose decreasing supply and borrow caps for all WBTC markets to a level 15% higher than current utilization.
Liquidation Threshold
We propose decreasing the LT of all markets by 1 percentage point, finding a middle ground between increasing the buffer in case of liquidations and reducing the health of existing positions.
LTV
We propose reducing LTV to 70% for all markets where it is currently higher than this value.
Reserve Factor
We maintain our Reserve Factor recommendation included in the previous proposal.
Specification
Given these observations, we recommend making the following changes, with the new recommended value following the arrow:
| Version | Asset | Chain | Reserve Factor | LT | Potential Liqs. | LTV | Supply Cap | Borrow Cap |
|---|---|---|---|---|---|---|---|---|
| V3 | WBTC | Arbitrum | 20% → 40% | 78.0% → 77.0% | $1.40 | 73.0% → 70.0% | 5,000 → 3,800 | 1,115 → 260 |
| V3 | WBTC | Optimism | 20% → 40% | 78.0% → 77.0% | $277 | 73.0% → 70.0% | 1,200 → 650 | 250 → 48 |
| V3 | WBTC | Polygon | 20% → 40% | 78.0% → 77.0% | $55.40 | 73.0% → 70.0% | 3,100 → 1,900 | 851 → 85 |
| V3 | WBTC | Ethereum | 20% → 40% | 78.0% → 77.0% | $1,700 | 73.0% → 70.0% | 43,000 → 42,000 | 28,000 → 3,250 |
| V3 | WBTC.e | Avalanche | 20% → 40% | 67.0% → 66.0% | $50 | 0.0% | 2000 → 175 | 1,100 → 7 |
| V2 | WBTC | Ethereum | 80% | 82.0% → 81.0% | $1,400 | 72.0% → 70.0% | 0 | 0 |
| V2 | WBTC | Polygon | 99.99% | 75.0% → 74.0% | $1,100 | 70.0% | 0 | 0 |
| V2 | WBTC.e | Avalanche | 75% | 70.0% → 69.0% | $0 | 0.0% | 0 | 0 |