Summary
A proposal to increase sAVAX’s liquidation threshold and LTV on Aave V3 Avalanche.
Motivation
sAVAX is currently configured with a liquidation threshold (LT) of 45% and max loan-to-value (LTV) of 40%. Following our observations and simulations, we believe increasing the LT and LTV for this market is prudent.
sAVAX’s average market cap over the past 180 days is $257M, and its daily average volume is $3.1M. It has registered a daily annualized volatility of 90.88%, a 30-day annualized volatility of 74.11%, and its largest single-day price drop was 14.5%.
Its supply is well distributed, with all but two of the top 10 suppliers leveraging the asset with WAVAX.
Supply has been trending upward since the end of July.
95.6% of the value of assets borrowed against sAVAX is WAVAX in E-Mode. USDC is the most popular non-E-Mode asset borrowed.
Specification
Given these observations, we recommend increasing sAVAX’s LTV and LT and increasing its LTV in E-Mode by a small amount.
| Asset | Chain | Market | Current LTV | Recommended LTV | Current LT | Recommended LT |
|---|---|---|---|---|---|---|
| sAVAX | Avalanche | Main | 40% | 50% | 45% | 55% |
| sAVAX | Avalanche | E-Mode | 92.5% | 93% | 95% | - |
Next Steps
- Following community feedback, submit the ARFC for a snapshot vote for final approval.
- If consensus is reached, submit an Aave Improvement Proposal (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