Chaos Labs - Monthly Community Update

November-December 2022

Overview

Chaos Labs is happy to share our first community update. In this update, we will highlight the past month’s activities and proposals and share our planned work moving forward.

Highlights

What’s Next

In the coming month, the Chaos team will be focused on a few areas:

  • Ongoing and proactive risk management in v2 and v3 markets
  • Supporting the deployment of v3 Ethereum
    • Initial risk parameter recommendations for the assets to be deployed on the network. We are working closely with the BGD team and other protocol contributors and shared our initial methodology and recommendations with the community. In the coming weeks, the community will decide on the initial assets and risk parameters for the deployment launch.
    • Discussion and research on risk analysis regarding the upcoming GHO launch - more on this to come over the coming weeks.
  • Parameter Recommendation Dashboard - we are in the final stages of work on all fronts (data, infra, UI) with planned delivery in 3-4 weeks.
  • We put forward a proposal to formally cover v2 markets and include proactive risk analysis and management while encouraging and supporting a safe migration to the upcoming Ethereum v3 deployment - the full details can be found here. After passing the initial Snapshot, we will formally post an AIP the first week of January.

We thank the community for the support, feedback, and involvement over this past eventful month. We invite the community to reach out with any question, feature request, or any other concern!

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January 2023

Overview

In this update, we highlight the past month’s activities and proposals and share our planned work moving forward.

Highlights

  • Following a detailed community discussion around the launch of Ethereum V3, our proposal for initial onboarded assets was chosen by the community. We are super excited about the launch of V3 on Ethereum and looking forward to continuously amending risk parameters and adding new assets to the deployment.
  • Suggested a framework for collaboration between Aave risk managers. This framework aims to create clarity for the Aave community around risk-related items while maximizing the advantages of multiple risk managers in the protocol.
    • The Chaos and Gauntlet (@paulieJ @deepa) teams have been utilizing this framework as a basis for our collaboration. We have set up open communication lines, bi-weekly syncs, and a shared work tracker and are working on providing clear proposals and recommendations for the community.
    • The teams collaborated and proposed joint recommendations for the initial parameters of the cbETH and rETH listings to Ethereum V3.
    • Published a community framework for recommending risk parameters for new asset listings.
  • Supported @llama on the CRV Interest Rate Curve Upgrade proposal, utilizing our supply and borrow cap methodologies to recommend updated caps for CRV on Polygon V3.
  • Provided analysis and recommendation for a supply cap for AAVE on Optimism V3. The community decided to move forward with Gauntlet’s proposal to reduce immediate tail risk, which is planned to be followed by a more comprehensive community discussion around methodology assumptions and community risk appetite.
  • Our proposal to formally cover V2 markets and include proactive risk analysis and management while encouraging and supporting a safe migration to the upcoming Ethereum V3 deployment was approved by the community. We thank the community for this vote of confidence in Chaos Labs.

What’s Next

In the coming month, the Chaos team will focus on the following few areas:

  • Optimization of risk parameters following the launch of our V3 Monte Carlo simulation framework

  • V2 → V3 transition:

    • Methodically amending asset parameters to incentivize new users to migrate accounts to V3.
    • Helping analyze incentive (both treasury- and parameter-managed) schemes to incite account transitions.
  • Analysis and parameter recommendations for new assets and markets:

    • wstETH (V3 Arbitrum), sfrxETH (V3 Ethereum), LUSD (V3 Ethereum) - working on providing risk parameter recommendations for the said assets.
    • Metis and Celo networks - working on providing recommendations on the initial list of assets and parameter configurations to allow a final Snapshot to approve the deployment.
  • Discussion and research on risk analysis regarding the upcoming GHO launch

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