LlamaRisk welcomes Ethena’s prompt response and dedication to ensuring proper capitalization of the insurance fund. Serving both Aave and Ethena as an independent provider, our unequivocal commitment remains to ensure that risk is properly managed and protocols remain safe. This naturally puts us in a contrarian position, often having to negotiate with growth. It is a position that we fully assume.
We agree that the methodology presented can be further improved. The Ethena team has been very receptive to our comments and has recently shown further commitment to providing analytics that would help refine our model.
With the additional 10m added to the insurance fund, this ARFC is no longer needed. We stand by our recommendation to raise the liquidation penalty to 4%, which has been included in this other ARFC.