[ARFC] Recommendations for MAI/MIMATIC, 2023-09-08

Recommendations for MAI/MIMATIC, 2023-09-08

Given the MAI/MIMATIC drawdown to 0.88 over the past 24 hours, after the July drawdown to 0.94, MAI/MIMATIC has been trading outside of its intended peg to $1.

Currently, 1% depth for MAI/MIMATIC is ~20000 MAI/MIMATIC, positions reveal ~$40k MAI/MIMATIC supplied >= 0.9 LTV, with no material insolvency on either supply or borrow side.

To prevent buildup of additional potential risk, considering the implications of the July Multichain incident for MAI/MIMATIC, Gauntlet recommends freezing MAI/MIMATIC and setting MAI/MIMATIC LTV → 0.


Chain Asset Action
Arbitrum MAI/MIMATIC Freeze Reserve, set LTV → 0
Optimism MAI/MIMATIC Freeze Reserve, set LTV → 0
Avalanche MAI/MIMATIC Freeze Reserve, set LTV → 0
Polygon MAI/MIMATIC Freeze Reserve, set LTV → 0

Next Steps

We have aligned with @ChaosLabs on these recs and will provide the AIP shortly, via the direct to AIP framework.


Would also recommend to zero out isolation mode debt ceilings on any markets where they are not exhausted. Looks like theres about $200-250k of unused capacity across OP ARB and AVAX.


the ACI supports this proposal, we also echo @monet-supply comment.


The AIP has been posted here.

Forgive my ignorance, but does this affect current positions?? I am long MAI borrowing USDC.

QiDao supports this temporary measure. Supplies/Borrows with MAI on Aave have remained within healthy limits. However, this move is a helpful step to focusing on MAI’s repegging efforts

Thanks for your comments @monet-supply and @MarcZeller. As an update, AIP-318 to freeze MAI/MIMATIC and set LTV→0 has been executed. @thecryptodad no current positions were affected by this change.

Given community preference and to be extra cautious with the risks of MAI, we published an AIP to zero out MAI isolation mode debt ceilings on v3 Arbitrum, Optimism, Avalanche, and Polygon.

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After discovering some technical complications around setting the debt ceiling to 0 with consultation from @bgdlabs, we intend to cancel AIP-321 to set the MAI/MIMATIC debt ceiling to 0. We will keep the community updated.

Due to difficulties with the proposer (@Gauntlet ) canceling the proposal, we can confirm that Aave Guardian executed the cancellation.

For transparency with the community, the detection process and rationale were the following:

  • While doing the routinary review of on-chain proposals, we marked proposal 321 as with higher criticality than others due to:
    • We didn’t have to get access to review it in the pre-on-chain stage.
    • It dealt with a pretty new scenario: reducing to 0 (edge value) the debt ceiling of an asset (MAI in multiple networks) already frozen and with LTV0.
  • Proposal 321 execution actions were not really consistent with the intention of the proposer: reducing the debt ceiling of an isolated collateral to 0 means removing the asset from isolation, which is actually the opposite of a protective action (legitimate in some cases, but not here).
  • Once the debt ceiling is set to 0, the asset can’t be re-enabled in isolation in the future, without all funds deposited being emptied first. In a case like MAI, a possible case would be precisely that one: if the peg recovers to acceptable levels, the community could decide to unfreeze the asset, set an LTV > 0, and enable it again as collateral in isolation.
    This flow would be way more difficult to follow if 321 passed.
  • As commented before, setting the debt ceiling to 0 factually removes the asset from isolation. This means that users would be able to refill their position with other collaterals, as isolation rules don’t apply anymore. This simply goes against the purpose of all the other measures, because the correct flow would be for users to collateral swap MAI.
  • High-level, freezing + LTV0 already gives maximum protection, as the asset can’t be supplied or borrowed, and it loses its “collateral power” for new borrowings.

In aggregation, all the previous points indicate that there is no positive effect on 321, even creating some relatively complex scenarios, and so our recommendation to cancel.

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