[ARFC] Gauntlet recommendation to re-enable CRV borrowing on v3 Ethereum/Polygon

During the Vyper exploit, CRV borrowing was disabled on Ethereum and Polygon v3 with the hope of mitigating downward CRV price movement in light of excess CRV positions on Aave v2.

Given that a large majority of those CRV positions with excess risk have left the system, Gauntlet recommends reactivating CRV borrowing. In order to do so, we recommend a few other changes to CRV parameterization.


Ethereum v3

  • Lower supply cap from 51m → 7.5m, due to low usage.
  • Lower borrow cap from 7.7m → 5m due to low usage.
  • Lower debt ceiling from $5m → $1m due to low usage.
    • current debt ceiling usage is $17k / $5m.
  • Reactivate CRV borrowing.


Polygon v3

  • Lower borrow cap from 900k → 300k due to low usage.
  • Reactivate CRV borrowing.

Proposed caps will be more aligned with our conservative cap methodology, and current supply/borrows will be <= 20% of proposed caps on v3 Ethereum. Gauntlet believes lowering caps to align with our conservative methodology - given current usage - may help balance room for future demand with while mitigating risks associated with tail liquidity drops.

Next steps

Welcome community feedback and put up snapshot on 2023-11-20.


Chaos Labs supports the above recommendations

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The snapshot has been posted here.


CRV situation is much more stable now.

Seems safe to reactivate CRV borrowing with the recommendations given.

The AIP has been published here.

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