[ARFC] Deprecate Aave V2 AMM Market

Risk
1

Simple Summary

For clarity, we are starting a separate forum thread to follow up on the conversation here two weeks ago.

Given the low usage of the V2 AMM market and its risk/reward profile, this is a temperature check for deprecating the Aave V2 AMM market. Forum discussion can be found here.

Specifically, to

  1. Set Liquidation Threshold to 0 for all LP Tokens
  2. Freeze all other assets (DAI, USDC, Tether, WBTC, ETH)

Motivation

Given the low level of usage on the AMM V2 market, and the fact that the only unfrozen assets are now majors (DAI, USDC, USDT, WBTC, ETH) that are available on V2 ETH and V3 ETH, we recommend deprecating the AMM V2 market. This includes setting LTs to zero for all LP tokens, and freezing all other assets (DAI, USDC, Tether, WBTC, ETH).

Freezing assets does not liquidate positions. Setting LTs to zero can liquidate affected accounts (users who borrow against LP token collateral). There are currently ~$150k deposits of LP tokens in the market.

Next Steps

  • If the Snapshot vote passes, publish AIP with ample notice time for users to adjust their positions as needed.
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Snapshot vote has been published below - voting begins on 4/24/2023. We thank the community for their participation.

https://snapshot.org/#/aave.eth/proposal/0xc0be2141c5623d9233228b715def014050b5e224a6f8ec2c5ea67a15ba5cd8cb

1 Like
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The Snapshot vote has passed. We plan on putting up an on-chain vote in 4 weeks on 5/29/2023.

Reducing LT to 0 for all LP tokens will make those accounts liquidatable. As such, given the ~1 week long governance process, this would give users 5 weeks from now to make any changes to their positions. Currently, there are ~$120k of LP tokens supplied in the market.

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To give users additional time, we target 6/5/2023 for an on-chain proposal.