Summary
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.
Copyright
Copyright and related rights waived via CC0