[ARFC] TUSD Offboarding Plan Part II

UPDATE: after discussions with @ChaosLabs the ACI will follow their recommendation to implement a 65% LT to avoid unnecessary liquidations. Proposal has been updated.

Title: [ARFC] TUSD Offboarding Plan Part II
Author: Marc Zeller @marczeller - Aave Chan Initiative
Date: 2023-09-17


This ARFC proposes the continuation of the TUSD offboarding plan from Aave V2 by adjusting its risk parameters, mirroring the approach taken in the “[ARFC] BUSD Offboarding Plan Part III”.


This proposal is a continuation of stablecoins offboarding of the Aave V2 market.
TUSD is proposed to adopt the “final stage” offboarding parameters to incentivize repayment and withdrawal of liquidity in Aave V2 Pool

aBUSD will be withdrawn and converted to BUSD.

This ARFC also aims to authorize the ACI to publish regularly “withdraw aToken” mechanical AIPs that have low governance value. Part of the success of these offboarding plans relies on maintaining the available liquidity low, adding pressure on borrowers, and incentivizing repayment or, if there’s a lack of reaction, accelerating HF decay to create liquidations.

We believe that once the governance approves the offboarding plans and once an asset reaches the “final” stage of interestStrategy curve, there’s little to no governance value in going through the snapshot phase each time. A direct-to-AIP approach seems sufficient.


Risk Parameters Adjustment

The risk parameters for TUSD on Aave V2 will be adjusted as follows:

Parameter Previous Value New Value
Loan-to-Value (LTV) 0% 0%
Liquidation Threshold (LT) 75% 65%
Liquidation Bonus 10% 10%
Reserve Factor 95% 99.9%
uOptimal 20% 1%
Base Rate 0% 100%
Slope 1 10% 70%
Slope 2 200% 300%


The Aave-Chan Initiative is not presenting this ARFC on behalf of any third party and is not compensated for creating this ARFC.

Next Steps

  1. Gather community feedback on this ARFC.
  2. If community consensus is reached, escalate this proposal to the Snapshot ARFC stage
  3. if snapshot outcome is YAE, escalate the proposal to AIP stage


Copyright and related rights waived via CC0.


Good evening,
I’m supportive of this proposal. Doing everything to support V3 and and depreciate V2 only makes sense.

Quick question, will the BUSD then also be converted to another stablecoin like GHO/USDC/USDT?

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Hi @EzR3aL,

In the coming days, we will be sharing a proposal that includes converting BUSD to GHO. The GHO will then be used to support future Aave DAO funding initiatives.


We’re supportive of the off-boarding and indeed agree that Direct-to-AIP makes sense here.


Gauntlet supports the proposed parameters. Given utilization at 100%, incentivizing TUSD debt repayment + reduction in TUSD collateralized debt will help reduce risk.

The LT reduction from 75% to 65% may cause 5 accounts with ~$800 in borrow to become liquidatable. However, utilization has been 100%, which may limit liquidations. The LT reduction will also move a large $530k WETH borrower from HF 1.25 → 1.08.

Borrow rate will more than double from 210% APR to 470%, implying TUSD debt per user will grow 1.3% per day. Analysis of top borrowers suggests the accounts may become liquidatable soon without debt repayment.

account TUSD_debt days_to_liquidate
0xbab2051a457ad7338d8cfe142089e4062de48bd0 ~850k 115
0x26563eedb269448352ba0663f2ee554fbd389296 ~250k 4
0xbfb3c2cf90b17cabf40e73384e1fea5d64d83644 ~200k 18
0xa33974eceac58a9f469f07e8e7aa08a467707aed ~150k 30
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