This publication proposes disabling Isolation Mode for ARB on Aave v3 Arbitrum.
Motivation
Since the ARB airdrop, April 2023, the Arbitrum ecosystem has experienced exponential like growth and the ARB liquidity has improved significantly.
With the support of the Risk Service providers, this proposal is to disable Isolation Mode and enable ARB to be used in combination with other assets as collateral.
Yes please, ARB is so liquid and has enough history behind that could very well be promoted to the big league club. Remove the asset from isolation so we can all unlock more opportunities.
We support the proposal to remove ARB from isolation mode on Aave Arbitrum V3.
Motivation
The existing debt ceiling for ARB on V3 Arbitrum, capped at $14 million, is currently at 96% utilization.
The average market cap of ARB over the past six months is $1.7 billion, with DEX liquidity of $17.5 million under a 10% slippage. Taking into account prevailing market conditions and the enhanced liquidity for ARB on Arbitrum witnessed in recent months, we recommend removing it from isolation mode.
Positions Analysis
Its important to note that the majority of ARB debt positions are concentrated within three accounts, accounting for over 65% of the total debt, as outlined below. While this concentration does not affect the current recommendation, we remain vigilant in our monitoring of protocol utilization and user positions, which will be considered in future recommendations and in cases of significant market changes.
There are currently three major users utilizing ARB as collateral on V3 Arbitrum:
0x6950b033a816d04894da0929db9f96a82fad2808 - borrowing ~$5.5M of stables against his 9.92M ARB collateral, accounting for nearly 40% of the debt ceiling. The user’s current health score is 2.16.
0x790c9422839fd93a3a4e31e531f96cc87f397c00 - borrowing ~$3.3M of stables against his 3.19M ARB collateral, accounting for nearly 40% of the debt ceiling. The user’s current health score is 1.65.
0xab92fca834aac2afe16cf6a2fc60cc7a864a77a5 - borrowing ~$1.7M of stables against his 2.27M ARB collateral, accounting for nearly 12% of the debt ceiling. The user’s current health score is 16.
