We agree with the analysis that what Maker is doing to juice their revenue is very risky for the ecosystem and emblematic of the ‘highs’ of a bull market.
Just to provide some context: even though only ~2% of DAI supply (circulating) is collateralised by USDe lending on Maker, these loans earn 36% annual return and contribute 10% towards Maker’s expected revenues. Maker is simply trying to capture revenue at the top of the market but the risk of doing so, especially in a relatively newer protocol, necessitates a change in DAI’s risk parameters.
However, we should wait until we set LTV to 0% and potentially reduce it in steps, as we have done multiple times previously, and, as @EzR3aL said, set a higher RF to encourage migration to other assets as collateral.
Firstly, @ChaosLabs (and the new risk provider applicants) should be allowed to provide an analysis of the situation and their recommendations. Secondly, even though the TEMP CHECK to add USDe to Ethereum v3 has been approved, Chaos Labs has not yet provided a detailed analysis of its risk parameters - we should wait for this analysis in the ARFC stage to judge the level of risk Maker is taking on and the level of risk inherent in USDe. Thirdly, if further data is provided on the collateral usage of DAI within Aave, and it is low, then gradually removing DAI as collateral would make sense.
Lastly, the question here is about strategic alignment between Aave and Maker. If the community as a whole believes that there should only be minimal integration between Aave and Maker given the different directions both protocols and their governance is taking, we should remove sDAI from the Merit program and ensure minimal touchpoints between Aave and Maker.