# \[ARFC\] Chaos Labs - Ethereum V2 LT Reductions - 05/06/2024

**URL:** <https://governance.aave.com/t/arfc-chaos-labs-ethereum-v2-lt-reductions-05-06-2024/17598>\
**Category:** Governance\
**Created:** [May 6, 2024, 6:25pm UTC](https://governance.aave.com/t/arfc-chaos-labs-ethereum-v2-lt-reductions-05-06-2024/17598 "2024-05-06T18:25:27Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\
**Post date:** [May 6, 2024, 6:25pm UTC](https://governance.aave.com/t/arfc-chaos-labs-ethereum-v2-lt-reductions-05-06-2024/17598/1 "2024-05-06T18:25:27Z")

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# **Simple Summary**

A proposal to reduce Liquidation Thresholds on Aave V2 Ethereum.

# **Motivation**

In continuation of the deprecation of Aave V2, Chaos Labs advises implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum.

_As Liquidation Threshold reductions may lead to user accounts being eligible for liquidations upon their approval, we want to clarify the full implications to the community at each step. We will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution._

Our recommendations below suggest an LT configuration that optimizes reductions without significantly increasing the number of accounts eligible for liquidation. The proposed values are set at a margin of ~4-6% from the closest LT figure, which would trigger more substantial liquidations.

# **Specification**

### **Aave v2 Ethereum**

| Asset | Current LT | Chaos Rec LT | Value Liquidated ($) | Accounts Liquidated |
| --- | --- | --- | --- | --- |
| LINK | 68% | 65% | 650 | 4 |
| ZRX | 5% | 0.01% | 38 | 2 |

| | Value liquidated | Accounts liquidated |
| --- | --- | --- |
| Total | $688 | 6 |

# Next Steps

We will move forward with the [direct-to-AIP framework](https://snapshot.org/#/aave.eth/proposal/0x4fd764412e30cb038c7758ef739af089f1a59edfbbda7404751350833e3ad91e) and publish an AIP to implement the proposed updates.

# **Disclaimer**

Chaos Labs has not been compensated by any third party for publishing this ARFC.

# Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain)

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<div class="post-metadata">

**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\
**Post date:** [May 15, 2024, 1:49pm UTC](https://governance.aave.com/t/arfc-chaos-labs-ethereum-v2-lt-reductions-05-06-2024/17598/2 "2024-05-15T13:49:08Z")

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[AIP-105](https://app.aave.com/governance/proposal/v3/105/) has been published for this proposal.

Thank you in advance for your participation in the vote.

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**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\
**Post date:** [June 14, 2024, 1:49pm UTC](https://governance.aave.com/t/arfc-chaos-labs-ethereum-v2-lt-reductions-05-06-2024/17598/3 "2024-06-14T13:49:57Z")

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