Simple Summary
A proposal to reduce Liquidation Threshold (LT) on Aave V2 Ethereum.
Motivation
In accordance with the v2 deprecation framework, Chaos Labs and Gauntlet advise implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum
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 at least ~4% from the closest LT figure, which would trigger more substantial liquidations.
This will affect 20 accounts, leading to a cumulative liquidation of $1,101 in collateral value.
| Asset | Current LT | Rec LT | Value Liquidated ($) | Accounts Liquidated |
|---|---|---|---|---|
| 1INCH | 24% | 1% | 163 | 1 |
| BAL | 25% | 21% | 43 | 2 |
| BAT | 1% | 1% | 0 | 0 |
| CRV | 42% | 38% | 10 | 1 |
| CVX | 33% | 30% | 0 | 0 |
| DPI | 16% | 14% | 36 | 1 |
| ENJ | 50% | 50% | 0 | 0 |
| ENS | 50% | 47% | 2 | 1 |
| MANA | 48% | 37% | 28 | 1 |
| MKR | 35% | 30% | 149 | 1 |
| REN | 27% | 25% | 57 | 1 |
| SNX | 43% | 41% | 28 | 1 |
| UNI | 70% | 64% | 0 | 0 |
| xSUSHI | 28% | 1% | 270 | 9 |
| YFI | 45% | 43% | 0 | 0 |
| ZRX | 37% | 34% | 315 | 1 |
| LINK | 82% | 81% | 0 | 0 |
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.
Specification
Frozen Assets:
| Asset | Current LT | Rec LT |
|---|---|---|
| 1INCH | 24% | 1% |
| BAL | 25% | 21% |
| BAT | 1% | 1% |
| CRV | 42% | 38% |
| CVX | 33% | 30% |
| DPI | 16% | 14% |
| ENJ | 50% | 50% |
| ENS | 50% | 47% |
| MANA | 48% | 37% |
| MKR | 35% | 30% |
| REN | 27% | 25% |
| SNX | 43% | 41% |
| UNI | 70% | 64% |
| xSUSHI | 28% | 1% |
| YFI | 45% | 43% |
| ZRX | 37% | 34% |
| LINK | 82% | 81% |
Next Steps
We will move forward with the direct-to-AIP framework and publish an Aave Improvement Proposal (AIP) to implement the proposed updates.
Disclaimer
Chaos Labs and Gauntlet have not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0