The risk mentioned in the comment is not limited to the proposed action of increasing the LT for DAI, and the recommendation itself does not pose any new risk to the Optimism deployment. A malicious actor can exercise this vector by utilizing USDC with a higher LT (85%) or E-Mode, which sUSD is a part of, with an LT of 97.5%. A proper mitigation for the risk described could be to minimize the borrow cap for sUSD. However, at this time, dumping the entire borrow cap of sUSD (13M) leads to minimal price impact and we do not recommend an immediate change to the cap.
Chaos Labs considers the potential for these types of attacks in our analyses and maintain our recommendation to increase capital efficiency with no projected increase in VaR and EVar. We plan to publish the AIP for voting early next week.
Additional note: This proposal has been on the forums for 3 weeks, has been approved via a Snapshot vote, and is ready for the on-chain vote. This is not the first time Gauntlet’s concerns have been raised at the last minute. The governance framework purposely incorporates multi-day buffers to facilitate discussions and serve as a feedback period. Ignoring these periods and responding as proposals converge creates confusion and extra work for governance voters and contributors alike. There are cases in which this is warranted, specifically when major circumstance shifts occur between a Snapshot and AIP. However, this has not been the case recently, including here, and concerns, even if unfounded, could have been raised earlier. Our communication channels are open, and we are happy to assist Gauntlet or any other contributors if extra time is needed. We continue to welcome collaboration across risk protocol contributors and a streamlined communication process, using governance frameworks and timelines as a baseline for what is expected to advance the speed and efficiency of Aave’s governance process.