Simple Summary
Update on V2 Ethereum Deprecation Plan.
Motivation
Following the deprecation schedule, Gauntlet and Chaos recommend the following parameter changes to frozen assets on Aave v2 Ethereum.
Specification
Chaos Labs’ recommendations are a middle ground between Gauntlet’s conservative and aggressive recommendations. As such, we propose moving forward with Chaos Labs’ recommendations.
| Asset | Current LT | Chaos Rec LT | Value Liquidated ($) | Accounts Liquidated |
|---|---|---|---|---|
| BAL | 21% | 1% | 42 | 1 |
| CRV | 38% | 30% | 450 | 7 |
| CVX | 30% | 24% | 0 | 0 |
| DPI | 14% | 5% | 0 | 0 |
| ENJ | 50% | 44% | 50 | 1 |
| ENS | 47% | 38% | 2 | 1 |
| LINK | 81% | 80% | 33 | 1 |
| MANA | 37% | 29% | 28 | 1 |
| MKR | 30% | 28% | 1 | 1 |
| REN | 25% | 18% | 0 | 0 |
| SNX | 41% | 30% | 514 | 12 |
| UNI | 64% | 55% | 1,380 | 6 |
| YFI | 43% | 32% | 57 | 1 |
| ZRX | 34% | 24% | 1 | 1 |
| Value liquidated | Accounts liquidated | |
|---|---|---|
| Total | $5,460 | 33 |
Gauntlet Analysis
Recommendations
Following the deprecation schedule, we recommend the following conservative and aggressive parameter changes to frozen assets on Aave v2 Ethereum. The conservative recommendations aim to liquidate no assets, and the aggressive recommendations aim to limit the maximum amount liquidated per asset to $3000.
Out of 25 frozen assets, there are already 5 assets (BUSD, FIL, RAI, AMPL and UST) with LT of 0, and 5 assets (1INCH, SUSHI, BAT, FEI and KNC) with LT of 0.01.
Conservative:
| Asset | Current LT | Rec LT | Value Liquidated ($) | Accounts Liquidated | Cur HF | New HF | Needed HF |
|---|---|---|---|---|---|---|---|
| CVX | 0.3 | 0.2 | 0 | 1 | 1.93 | 1.84 | 1.05 |
| DPI | 0.14 | 0.03 | 0 | 0 | 1.77 | 1.74 | 1.05 |
| ENJ | 0.5 | 0.49 | 0 | 0 | 1.6 | 1.6 | 1.06 |
| ENS | 0.47 | 0.43 | 0 | 0 | 1.39 | 1.38 | 1.05 |
| LINK | 0.81 | 0.8 | 0 | 0 | 2.2 | 2.18 | 1.07 |
| MANA | 0.37 | 0.31 | 0 | 0 | 2.02 | 2 | 1.06 |
| UNI | 0.64 | 0.63 | 0 | 0 | 1.84 | 1.84 | 1.06 |
| ZRX | 0.34 | 0.27 | 0 | 0 | 2.79 | 2.39 | 1.51 |
Aggressive:
Under these recommendations, each asset will see less than $3,000 of its collateral liquidated. In total, this will affect 55 accounts, leading to a cumulative liquidation of $145,50.00 in collateral value.
| Asset | Current LT | Rec LT | Value Liquidated ($) | Accounts Liquidated | Cur HF | New HF | Needed HF |
|---|---|---|---|---|---|---|---|
| BAL | 0.21 | 0.01 | 142.42 | 3 | 2.13 | 2.12 | 1.05 |
| CRV | 0.38 | 0.27 | 956.97 | 11 | 7.37 | 7.36 | 1.08 |
| CVX | 0.3 | 0.2 | 0 | 1 | 1.93 | 1.84 | 1.05 |
| DPI | 0.14 | 0.02 | 84.27 | 1 | 1.77 | 1.73 | 1.05 |
| ENJ | 0.5 | 0.41 | 2622.92 | 4 | 1.6 | 1.59 | 1.06 |
| ENS | 0.47 | 0.35 | 1653.49 | 4 | 1.39 | 1.37 | 1.05 |
| LINK | 0.81 | 0.8 | 0 | 0 | 2.2 | 2.18 | 1.07 |
| MANA | 0.37 | 0.23 | 350.72 | 4 | 2.02 | 1.98 | 1.06 |
| MKR | 0.3 | 0.25 | 24.58 | 2 | 1.55 | 1.54 | 1.08 |
| REN | 0.25 | 0.07 | 2748.92 | 5 | 1.68 | 1.67 | 1.13 |
| SNX | 0.41 | 0.27 | 2718.28 | 10 | 1.92 | 1.91 | 1.1 |
| UNI | 0.64 | 0.55 | 1713.21 | 7 | 1.84 | 1.83 | 1.06 |
| YFI | 0.43 | 0.21 | 1534.22 | 3 | 1.72 | 1.69 | 1.07 |
Chaos Labs Analysis
LT Reductions
The recommendations below suggest an LT configuration that optimizes reductions without significantly increasing the number of accounts eligible for liquidation. The proposed values are set at a margin of ~4% from the closest LT figure, which would trigger more substantial liquidations.
| Asset | Current LT | Chaos Rec LT | Value Liquidated ($) | Accounts Liquidated |
|---|---|---|---|---|
| BAL | 21% | 1% | 42 | 1 |
| CRV | 38% | 30% | 450 | 7 |
| CVX | 30% | 24% | 0 | 0 |
| DPI | 14% | 5% | 0 | 0 |
| ENJ | 50% | 44% | 50 | 1 |
| ENS | 47% | 38% | 2 | 1 |
| LINK | 81% | 80% | 33 | 1 |
| MANA | 37% | 29% | 28 | 1 |
| MKR | 30% | 28% | 1 | 1 |
| REN | 25% | 18% | 0 | 0 |
| SNX | 41% | 30% | 514 | 12 |
| UNI | 64% | 55% | 1,380 | 6 |
| YFI | 43% | 32% | 57 | 1 |
| ZRX | 34% | 24% | 1 | 1 |
| Value liquidated | Accounts liquidated | |
|---|---|---|
| Total | $5,460 | 33 |
As Liquidation Threshold reductions may lead to user accounts being eligible for liquidations upon their approval, we want to clarify the full implications to the community at each step. Chaos Labs will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution.
Next Steps
We will move forward with the direct-to-AIP framework and aim to publish the AIP this week.
Disclaimer
Gauntlet has not received any compensation from any third-party in exchange for recommending any of the actions contained in this proposal.
By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.