April 2023
Overview
This update highlights the past month’s activities and proposals and shares our planned work.
Highlights
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We published our new Supply Cap Methodology. In this iteration of our methodology, we introduce a new stress-testing framework for setting the supply cap for each token, leveraging the Chaos Labs simulation platform. To find the optimal supply caps, we stress-test each token against appropriate stress scenarios based on historical data to measure the potential accrual of bad debt in these situations.
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Published the Chaos Labs - LSD Methodology Update. In this post, we walk through our framework for establishing risk parameters for Liquid Staking Derivatives, taking into account redeemability mechanisms, Oracle composition, liquidity, counterparty risk, and more.
- Initiated a community vote to gauge the community’s preference with respect to limiting the supply caps for LSDs, which will be considered in future supply cap recommendations.
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Following the community vote on V3 migration lever preferences, we prepared a comprehensive set of recommendations aimed at facilitating a seamless and successful migration from Aave V2 to V3 on Ethereum. This will be a multi-phased process that will include the completion of asset listing on V3 alongside parameter updates across V2 and V3 assets to promote migration. The full post can be found here.
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Added support for Polygon on the Chaos Labs Parameter Recommendation Platform. The platform now supports Avalanche, Arbitrum, Optimism, and Polygon, with Ethereum to follow shortly.
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Three proposals were published (listed below) for risk parameter updates and mitigation.
- Risk Parameter Updates - Aave V3 Optimism - a proposal to increase LTVs and LTs for WBTC and DAI on V3 Optimism.
- Supply and Borrow Cap Updates - 04.21.2023- a proposal to adjust supply and borrow caps for eight assets across all Aave V3 networks.
- Risk Parameter Updates - Aave V3 Polygon - a proposal to increase LTVs and LTs for WBTC, LINK, WMATIC, and DAI on V3 Polygon.
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Provided analysis and supported the following proposals:
- [ARFC] Aave V3 Deployment on BNB Chain
- [ARFC] Polygon v3 BAL Supply & Borrow Cap Increase
- [ARFC] Align AAVE Risk Parameters on Aave V3 Ethereum Market with Aave V2
- Launch Aave V3 on Metis
- [ARFC] stMATIC Supply Cap Increase Polygon v3
- [ARFC] MaticX Supply Cap Increase Polygon v3
- [ARFC] Add MAI to Optimism Aave V3 pool
- [ARFC] Add MAI to Arbitrum Aave V3 Market
- [ARFC] Add LUSD to Aave v3 on Arbitrum
What’s Next
In the coming month, the Chaos team will focus on the following few areas:
- Publish Chaos Labs’ IR Curves methodology
- Community plan for V2 → V3 migration as described here
- Continuous optimization of risk parameters on V3 deployments
- Integrate and support V3 Ethereum into the Chaos Labs Parameter Recommendation Platform.
- Adding features and improvements to the Chaos Risk Monitoring Platform to improve community engagement.
- Analysis and parameter recommendations for new assets and markets.