# \[ARFC\] - Chaos Labs Risk Parameter Updates - sAVAX on Aave V3 Avalanche - 07.16.2024 **URL:** \ **Category:** Governance\ **Created:** [July 16, 2024, 12:23pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-parameter-updates-savax-on-aave-v3-avalanche-07-16-2024/18277 "2024-07-16T12:23:35Z")\ **Posts on this page:** 3\ **Page:** 1
**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:** [July 16, 2024, 12:23pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-parameter-updates-savax-on-aave-v3-avalanche-07-16-2024/18277/1 "2024-07-16T12:23:35Z")
## Summary A proposal to adjust sAVAX’s LT and LTV on Aave V3 Avalanche. ## Motivation Increasing the liquidation threshold and LTV for assets allows Aave to enhance users’ capital efficiency. However, this must be balanced with proper risk management to ensure that there is a sufficient buffer in the event of large drawdowns and/or liquidations. The analysis below was conducted utilizing our LT simulations, which showed either minimal or no increases in VaR at the recommended LT levels while also considering user distribution and on-chain liquidity. ### sAVAX sAVAX’s LTV and LT are currently set to 30% and 40%, respectively (its E-Mode parameters are 92.5% and 95%). The top suppliers are primarily looping sAVAX and WAVAX, reducing the risk of large-scale liquidations in this market. ![Untitled - 2024-07-16T152249.437](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/f/f34c482d24e6553c51563969fd019deb6d93b2f3.png) However, there are is a small amount of non-WAVAX borrows against sAVAX, primarily WETH.e and stablecoins. ![Untitled - 2024-07-16T152252.356](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/4/47ada9362d6816ad15c00c43a021e2990425d280.png) Moreover, sAVAX maintains strong liquidity against AVAX, meaning that potential liquidations of sAVAX collateralized debt are likely to be completed efficiently. ![Untitled - 2024-07-16T152254.709](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/f/fc1ee74a3813025d70c1f1206cc62a871daf80d5.jpeg) Given user distribution and liquidity, we recommend increasing LTV to 40% and LT to 45%. ## Specification Given these observations, we recommend making the following changes: | Chain | Asset | Parameter | Current | Recommended | | --- | --- | --- | --- | --- | | Avalanche | sAVAX | LTV | 30% | 40% | | Avalanche | sAVAX | Liquidation Threshold | 40% | 45% | ## Next Steps 1. Following community feedback, submit the ARFC for a snapshot vote for final approval. 2. 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](https://creativecommons.org/publicdomain) ---
**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:** [July 22, 2024, 8:00am UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-parameter-updates-savax-on-aave-v3-avalanche-07-16-2024/18277/2 "2024-07-22T08:00:43Z")
We have published a [Snapshot](https://snapshot.org/#/aave.eth/proposal/0x471ab55b0091043963c744f228befd842aeb354b0d04c76da3c9eb2b401934a4) for the community to vote on, starting in 24h. We thank you in advance for your participation in the vote. ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [August 21, 2024, 8:01am UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-parameter-updates-savax-on-aave-v3-avalanche-07-16-2024/18277/3 "2024-08-21T08:01:34Z")
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