March 2023
Summary
Sharing a recap of Gauntlet’s market risk management work with Aave in March 2023. See below for this past month’s work summary and a preview of what’s coming up in April.
| Category | Work Completed | Commmentary |
|---|---|---|
| Quantitative Research |
Gauntlet E-Mode methodology for Aave V3 Gauntlet Isolation Mode methodology for Aave V3 Initial analysis on GHO launch parameters |
Published methodology and community votes to help define the protocol’s approach for E-Mode and Isolation Mode Support GHO launch with initial analysis and recommendations |
| Recommendations |
Risk recommendations to recalibrate all Aave markets following changed market conditions after the USDC volatility LSD cap updates on V3 ETH V3 Arbitrum updates |
Daily risk simulations and stress tests |
| Risk Modeling |
USDC volatility firefighting, including risk modeling, risk recommendation triggers, continuous monitoring, and post-mortem analysis Implement interest rate curve optimizations covering all V3 markets Freeze markets on Aave V2 AMM market as a result of low liquidity and usage Provide risk analysis for potential Aave launch on Celo Aave community plan for V2 → V3 migration BUSD offloading risk analysis Provide risk analysis for potential Aave launch on Metis GMX asset listing on Aave V3 Arbitrum risk analysis MaticX on Polygon V3 risk analysis BAL IR curve update analysis stMatic analysis cbETH on V3 ETH analysis GHST on Polygon V3 analysis agEUR on Aave V3 risk analysis |
Firefighting during unique market stress events. Risk modeling to provide insight into the risk/reward tradeoffs of Aave initiatives |
| Risk Monitoring and Alerting | Launched Aave market alerts Telegram Channel, open to the public, for alert updates from Gauntlet’s monitoring platform BTC.b supply MaticX and stMatic cap updates Position Liquidation on Aave V2 Position near liquidation stETH liquidation EURS utilization SUSHI cap usage stMatic cap usage Arbitrum V3 liquidation wstETH cap usage wAVAX cap usage |
Gauntlet’s risk monitoring platform alerts the community of risk updates |
Highlights
- Firefighting when USDC lost its equivalence to the dollar. Provided risk modeling to inform risk mitigation recommendations and price triggers while communicating closely with Aave Guardian and community. Provided post-mortem analysis to the Aave community.
- After conducting research on Aave V3 dynamics, published V3 E-Mode and V3 Isolation Mode methodology, with weeks of community discussion for protocol alignment.
- Provided risk analysis for GHO launch.
- Implemented interest rate curve optimizations covering all Aave V3 markets. This follows Gauntlet’s interest rate curve changes for Aave V2.
- Continuous market alerts from Gauntlet’s risk monitoring platform
Upcoming Selected Work
- Implement E-Mode recommendations per the community’s preference
- Provide risk analysis on Aave’s cross-chain launches
- Continued support of community initiatives and market alerts
We are happy to answer any questions or hear any feedback - feel free to comment below.