[ARFC] CRV Aave V2 Ethereum - LT Reduction - 09.19.2023

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 Borrows (USD) Health Health After Change
0x7a16ff8270133f063aab6c9977183d9e72835428 40.86M 92.88M 10.36M 1.85 1.78
0xc420c9d507d0e038bd76383aaadcad576ed0073c 2M 4.54M 440K 2.13 2.00
0xb5587a54ff7022ac218438720bdcd840a32f0481 1.65M 1.52M 936K 1.24 1.21
0x279a7dbfae376427ffac52fcb0883147d42165ff 735K 1.35M 324K 1.25 1.18
0xaecdde1672f3f121b3a6c43a2e0b5dfc28f6224c 449K 1.02M 176K 1.20 1.12

Gauntlet Analysis

Guantlet recommends reducing CRV LT from 47% to 45% this week.

There have been no material changes to the user’s position over the past week. Given CRV price increase to 0.443, this increases HF to 1.88.

Daily CRV volatility is ~ 4.5%, and CRV liquidity has slightly improved since last week. Based on Gauntlet’s deprecation schedule highlighted here, we recommend having sufficient buffer to the user’s historical maintained HF of 1.6. Reducing LT to 45% maintains this buffer.

The change reduces the user’s HF to 1.8. Below are accounts whose HF will be < 1.1 with the change. No accounts will be liquidated.

user_address supply_balance_usd borrow_balance_usd hf hf_new supplied_symbols borrowed_symbols orig_lt new_lt
0x7421c1ed16b400e4868ce696452c3c985f8cd04d 24017.0 10220.61 1.10 1.06 [CRV] [USDT] 0.47 0.45
0xe95d1bf610fdb4e5d573b4d4a7fec04cfa82b863 189.0 79.40 1.12 1.07 [CRV] [WETH] 0.47 0.45


Asset Parameter Current Value Recommendation Change
CRV LT 47 45 -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 and Gauntlet have not been compensated by any third party for publishing this ARFC.


Copyright and related rights waived via CC0

1 Like

AIP-326 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, 3 accounts with a total of ~$7 will be eligible for liquidation following the proposed changes:

This topic was automatically closed 30 days after the last reply. New replies are no longer allowed.