[ARFC] CRV Aave V2 Ethereum - LT Reduction - 08.21.2023

Simple Summary

A proposal to reduce Liquidation Threshold (LT) for CRV on Aave V2 Ethereum.


Following the CRV V2 Ethereum Deprecation Plan approved by the community and given the current market conditions and protocol usage, Chaos Labs and Gauntlet aligned on a 2% LT reduction.

Chaos originally proposed a 3% reduction, while Gauntlet proposed a 2% reduction. The individual analyses and considerations can be found below.

As of today, this LT reduction will not make any account eligible for liquidation.

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. Chaos Labs will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution.

Chaos Labs Analysis

Chaos Labs recommends a 3% reduction, with the following impact on top CRV suppliers (used as collateral):

Account Total Supply (USD) Total CRV Supplied Total CRV Supplied (USD) Total Borrows Health Health After Change CRV price that will trigger liquidation
0x7a16ff8270133f063aab6c9977183d9e72835428 58.18M 123.35M 58.18M 14.78M 1.93 1.81 45%
0xc420c9d507d0e038bd76383aaadcad576ed0073c 2.13M 4.52M 2.13M 429.64K 2.44 2.28 56%
0xb5587a54ff7022ac218438720bdcd840a32f0481 1.86M 1.86M 875.55K 1.15M 1.12 1.10 29%
0x279a7dbfae376427ffac52fcb0883147d42165ff 888.56K 1.57M 741.14K 420.51K 1.14 1.10 13%
0xaecdde1672f3f121b3a6c43a2e0b5dfc28f6224c 558.8K 1.15M 558.8K 233.88K 1.17 1.10 10%

Gauntlet Analysis

Gauntlet recommends changing the LT from 49% to 47%. Given ~5% daily volatility for CRV, this will preserve a 3-std daily move buffer to historically maintained HF levels for the largest suppliers of CRV, which reduces the risk of unhealthy liquidations.


Asset Parameter Current Value Recommendation Change
CRV LT 49 47 -2%

Next Steps

As the community approved a direct-to-AIP framework for the CRV deprecation plan, we plan to submit an Aave Improvement Proposal (AIP) to implement the proposed updates.


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


Copyright and related rights waived via CC0


AIP-305 has been published for this proposal, with voting starting in less than 24h.

Thank you in advance for your participation in the vote.

As of today, no accounts will be eligible for liquidation following the proposed changes.

As of today, 2 accounts with a total of ~$4 will be eligible for liquidation following the proposed changes:

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As of today, 3 accounts with a total of ~$25 will be eligible for liquidation following the proposed changes:

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