Karpatkey Delegate Platform

Voting Actions: August 14th – 18th

Proposal: [ARFC] Chaos Labs Risk Parameter Updates - Aave V2 Ethereum
Vote: Yae - Aggressive
Reasoning: We align with Chaos Labs’ recommendation to use the aggressive set of parameters. The difference in value on the possible liquidations between suggestions is not a concern and may incentivise the users to close their positions and move to v3.

Proposal: Gauntlet Recommendation to Freeze CRV on Aave v2 Ethereum
Vote: Yae
Reasoning: We support this proposal. We’ve been witnessing a Health Factor arbitrage, where debt positions rebalance between lending markets, and risk flows to the most tolerant protocol. In essence, this implementation will have two main consequences:

  1. Increase the probability of a liquidation event: freezing any further CRV supply leaves just one option for the borrowers to increase the Health Factor, which is to repay the debt; and
  2. Limit Aave’s potential loss amount on a bad debt situation: despite having the potential to originate a spike in CRV supply before governance approval, as pointed out by @ChaosLabs, CRV emissions increase (almost) linearly until August 2024. One can assume that the amount potentially supplied until the execution of this proposal would always be inferior to the amount supplied in the future, and this would limit asset-loss exposure through an indirect ceiling to the borrowed amount.

In our opinion—the end justifies the means—it’s time for Aave to stop being the lender of last resort.

Proposal: [ARFC] CRV V2 Ethereum Deprecation Plan
Vote: Yae
Reasoning: We support this proposal. In light of recent events and considering the concurrently active discussion around the freezing of CRV on v2, this deprecation plan is a metered approach that will slowly push the migration of users onto v3 while also addressing the concentration risks on v2.

Proposal: [ARFC] - Chaos Labs Scope and Compensation Amendment
Vote: Yae
Reasoning: We agree with this expansion in the scope of work from V3 to include V2 and GHO. The feedback on Chaos Labs’ performance thus far has been positive. We also agree that the diversification of risk management service providers is an added benefit.

Proposal: [ARFC] Sigma Prime audit budget extension
Vote: For
Reasoning: We agree with this budget extension. The work is necessary, and the performance record of Sigma Prime raises no concerns.