[Direct to AIP] Risk Parameter Adjustments for Aave V3 Scroll Instance
Author: ACI
Date: 2025-09-11
Summary
This Direct to AIP proposes immediate risk parameter adjustments for all assets on the Aave V3 Scroll instance to mitigate potential risks arising from ongoing governance instability within the Scroll ecosystem. The proposal seeks to increase Reserve Factors (RF) across all assets and implement conservative supply and borrow cap reductions to protect the Aave protocol and its users.
Motivation
Recent governance developments within the Scroll ecosystem have introduced material uncertainty and potential risks that warrant immediate protocol protection measures. As a responsible risk management action, these adjustments aim to:
Reduce Exposure: Lower caps will limit the protocol’s total exposure to Scroll-based assets
Enable Swift Response: Direct to AIP process allows for rapid implementation of necessary risk controls
Specification
Reserve Factor Updates: Increase RF for all listed assets to 50%.
Supply Cap Updates: Reduce supply caps to current level across all assets
Borrow Cap Updates: Reduce borrow caps to current level for all borrowable assets
Implementation
This proposal will be implemented through the Direct to AIP process, enabling rapid deployment of risk mitigation measures. The changes will take effect immediately upon AIP execution.
Next Steps
Direct AIP publication and voting
Implementation upon successful vote
Ongoing monitoring of Scroll governance developments
Disclaimer
This proposal is submitted by ACI (Aave Chan Initiative) as a risk management measure. The proposal is not intended to pass judgment on Scroll governance but rather to implement prudent risk controls during a period of uncertainty.
Given the uncertainty of the situation, Chaos Labs supports the changes proposed to risk parameters in the Aave V3 Scroll instance. Specifically, it supports the increase of Reserve Factor across all of the Scroll markets and the decrease in supply and borrow caps to match the current demand.
Motivation
The Scroll ecosystem is currently undergoing a phase of heightened uncertainty with unclear governance direction. This introduces plausible risks that could directly affect the resilience of deployed protocols such as Aave.
Additionally, on-chain activity on Scroll has contracted significantly over the last year. Supply and borrow on Aave Scroll, which once exceeded $400M and $250M respectively, have fallen to ~$47M supply and ~$23M borrow today, reflecting a steep reduction in demand.
More critically, DEX liquidity on Scroll has deteriorated even further, with TVL across key DEXs (SyncSwap, Ambient, Honeypop) dropping from over $80M in late 2024 to less than $15M today. This thin liquidity environment increases liquidation risk and limits the potential growth of the Aave instance in the future.
Together, these dynamics justify conservative adjustments to reduce exposure and temporarily manage growth. Chaos Labs will continue to monitor the situation and update the recommended parameters following an improvement of Scroll’s demand and liquidity.
Specification
Asset
Chain
Current Supply Cap
Recommended Supply Cap
Current Borrow Cap
Recommended Borrow Cap
Current Reserve Factor
Recommended Reserve Factor
WETH
Scroll
15,000
5,000
13,500
4,500
15%
50%
weETH
Scroll
15,000
5,000
1
-
45%
50%
wstETH
Scroll
2,000
1,000
1,000
500
5%
50%
USDC
Scroll
6,000,000
2,000,000
5,400,000
1,900,000
10%
50%
SCR
Scroll
1,500,000
-
28,000
-
20%
50%
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.
LlamaRisk supports this proposal and the specific parameters proposed by @ChaosLabs.
This is a measured reaction to current developments and avoids having an undue negative impact on Aave V3 Scroll users.
Matching the supply and borrow caps will ensure no additional exposure to Scroll is obtained. Simultaneously, increasing the reserve factor will make it less attractive for suppliers to deposit, which reduces available liquidity and, in turn, incites borrowers to repay due to increased utilisation. This is necessary because of the deteriorating liquidity conditions observed on Scroll.
Disclaimer
This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.
