Chaos Labs - Monthly Community Update

[ChaosLabs]

November 2024

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

Highlights

Onboard and Enable sUSDe Liquid E-Mode

We published a detailed analysis of sUSDe risks with its current oracle setup, specifically measuring the price deviations of USDe and sUSDe. Additionally, we analyzed the liquidity of the sUSDe/sDAI Curve pool. We used the maximum discount observed below (2.47%) as a guide for setting the LB to 3%. The initial recommendation included USDS and USDC as the borrowable assets; a later recommendation added USDT as another borrowable asset.

Adjust weETH Interest Rate Parameters on Aave V3 Scroll.

Following Scroll’s TGE, we observed changes in the V3 Scroll deployment, particularly in the weETH and WETH markets. This was largely related to users removing their WETH supply after the Scroll airdrop. We recommended reducing weETH’s Slope 1 to a level where borrowing weETH against WETH becomes profitable, allowing users to arbitrage rates and reduce WETH’s without depositing new supply.

Deployment of Aave on Linea

We completed an analysis of Linea, including its technical architecture, its ecosystem and market, and its DEXes, tokens, and oracles. Ultimately, we found that it is appropriate for Aave to create a new deployment on Linea. Using historical liquidity, we provided recommendations for listing parameters for six assets. We also provided parameters for an ETH-correlated E-Mode and a wstETH/WETH E-Mode with more aggressive parameters.

Add PAXG to Aave V3 Main Instance on Ethereum

Chaos Labs conducted a detailed technical review of PAXG, which represents direct ownership of physical gold. The listing was complicated by the fact that PAXG is tradable 24/7, differing from the trading hours of the underlying gold. This causes deviations from the gold oracle price, which is not updated on the weekend. We observed a 22.2% divergence between the PAXG and XAU oracle prices in April 2024. Ultimately, we recommended using the XAU market price oracle, finding that it acts as a reduced LTV during upside deviations and it is statistically improbable for bad debt to accrue during downside deviations based on the historical performance of gold.

• Over the month, we published the following proposals for risk parameter updates:
  • [ARFC] Chaos Labs Risk Parameter Updates - wstETH liquid e-modes on Arbitrum, Base, Scroll - 11.01.24
  • [ARFC] Chaos Labs Risk Parameter Updates - Adjust weETH Interest Rate Parameters on Aave V3 Scroll - 11.01.24
  • [ARFC] Chaos Labs Risk Parameter Updates - Adjust weETH Interest Rate Parameters on Aave V3 Scroll - 11.01.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on the Lido Instance - 11.02.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on V3 Ethereum and Base - 11.05.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Ethereum Lido Market - 11.08.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Ethereum Lido Market - 11.12.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 11.13.24
  • [ARFC] Chaos Labs Risk Stewards - Increase sUSDe Supply Caps on Aave V3 - 11.18.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Aave V3 - 11.19.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 11.21.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 11.25.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Borrow Caps on Aave V3 - 11.27.24
  • [ARFC] Chaos Labs Risk Stewards - Increase Supply Caps on Aave V3 - 11.29.24
• Additionally, we provided analysis regarding the following proposals and discussions:
  • [ARFC] Add rsETH to Aave V3 Ethereum
  • Technical maintenance proposals
  • [ARFC]. Aave Generalized Risk Stewards (AGRS) activation
  • [ARFC] Onboard AUSD to Aave V3 on Avalanche
  • [ARFC] Onboard and Enable sUSDe liquid E-Mode on Aave v3 Mainnet and Lido Instance
  • [ARFC] Onboard GHO and Migrate Streams to Lido Instance
  • [ARFC] Increase wstETH Borrow Rate on Lido Instance
  • [ARFC] Mint & Deploy 10M GHO into Aave v3 Lido Instance
  • [ARFC] Onboard and Enable sUSDe liquid E-Mode on Aave v3 Mainnet and Lido Instance
  • [ARFC] Enable cbBTC/WBTC liquid E-Mode on Aave v3
  • [ARFC] Enable tBTC/WBTC liquid E-Mode on Aave v3 Mainnet
  • [ARFC] Onboard SCR to Aave V3 Scroll Instance
  • [ARFC] Enable sUSDe/USDT Liquid E-Mode on Core Instance
  • [ARFC] USDS borrow rate update on Core and Prime Instances
  • [ARFC] Deployment of Aave on Linea
  • [ARFC] Onboard cbBTC to Arbitrum Instance
  • [ARFC] Add PAXG to Aave v3 Main Instance on Ethereum
  • [ARFC] wstETH/WETH Lido Borrow Rate Update

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.
• Parameterization for new Liquid E-Modes.
• 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.