Chaos Labs - Monthly Community Update

[ChaosLabs]

October 2024

This update highlights Chaos Labs’ activities and proposals in October.

Highlights

Migration of WETH-WETH Loopers and E-Mode Optimization

We published a set of recommendations to discourage WETH-WETH looping in the Lido instance. This included providing time to deleverage, reducing the LB of WETH outside of E-Mode, removing WETH from E-Mode collateral, restoring the liquidation bonus, and finally increasing the LTV of WETH outside of E-Mode. This was critical, as we found that forced transitions out of E-Mode could trigger $30M in liquidations.

Gnosis DAO Credit Line Instance

Following a post by ACI, we provided recommendations for a Gnosis DAO credit line instance, a novel instance for Aave. This required the development of ad hoc methodologies to ensure that the credit line remains healthy while also allowing for greater borrowing than would otherwise be facilitated by GNO’s on-chain liquidity.

ezETH and wstETH Liquid E-Modes

We followed up on our previous listing recommendation to provide new E-Mode categories for ezETH and wstETH, including ezETH/USDS and ezETH/wstETH, alongside optimized wstETH/WETH configurations on L2s. Additionally, we updated our non-E-Mode parameter recommendations to account for these new E-Modes. We also updated our CAPO recommendation to account for the recent distribution of EIGEN rewards in ezETH’s exchange rate.

• Over the month, we published the following proposals for risk parameter updates:
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Aave V3 - 10/02/24
  • [ARFC] Chaos Labs Risk Stewards - Increase cbBTC Supply and Borrow Caps on Aave V3
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 10/08/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 10/11/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 10/14/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 10/16/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Aave V3 - 10/18/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps for WETH on Scroll V3 - 10/20/24
  • [ARFC] Chaos Labs Risk Parameter Updates - Increase Borrow caps for wstETH on the Lido Market - 10/20/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 Ethereum Main - 10/23/24
  • [ARFC] Chaos Labs Risk Stewards - Increase cbBTC Borrow Caps on Aave V3 Base - 10/25/24
  • [ARFC] Chaos Labs Risk Parameter Updates - wstETH / WETH E-mode Parameters for Lido Market - 10/20/24
  • [ARFC] Chaos Labs Risk Parameter Updates - WBTC Reserve Factor and UOptimal Increase - 10/25/24
  • [ARFC] Chaos Labs Risk Parameter Updates - Migration of WETH-WETH Loopers and E-Mode Optimization - 10/28/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Ethereum Lido Market - 10/27/24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 Base - 10.31.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Aave V3 Arbitrum - 10.31.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 Ethereum - 10.31.24
• Additionally, we provided analysis regarding the following proposals and discussions:
  • [ARFC] Onboard USDC to Aave v3 Lido Instance
  • [ARFC] Deploy a Gnosis DAO Credit Line Aave v3 Instance
  • [ARFC] Onboard sUSDe, USDe, and weETH to Aave v3 on zkSync
  • [ARFC] Add support for Wrapped OETH (wOETH) to Aave v3
  • [ARFC] Add support for Wrapped Super OETH (wsuperOETHb) to Aave v3
  • [ARFC] Onboard FRAX to Aave v3 Lido Instance
  • [ARFC] ustb/buidl gsm
  • [ARFC] Deploy a Crypto.com Aave v3 Instance
  • [ARFC] Remove FRAX from Isolation Mode on Aave v3 Mainnet
  • [ARFC] Launch GHO on Avalanche & set ACI as Emissions Manager for rewards
  • [ARFC] Launch GHO on Base & set ACI as Emissions Manager for rewards
  • [ARFC] Onboard ezETH to Aave V3 Lido Instance
  • [ARFC] Deploy aUSDC GSM on Ethereum
  • [ARFC] PYUSD Reserve Configuration Update & Incentive Campaign
  • [ARFC] Onboard wstETH to Aave V3 on BNB Chain
  • [ARFC] Onboard ezETH to Arbitrum and Base Instances
  • [ARFC] Chaos Labs - Migrating MKR to SKY on Aave V3 Ethereum Main Market - 10/20/24

What’s Next

In the coming months, the Chaos team will continue its focus on the following areas:

• GHO: ongoing recommendations, including updating parameters for cross-chain GHO.
• Continuation of the V2 risk parameter updates to gradually reduce capital efficiency across V2 collateral assets.
• Continuous optimization of risk parameters on all V3 deployments.
• Further updates on the development of Chaos Labs Risk Oracles.
• Analysis and parameter recommendations for new assets and markets.