Chaos Labs Risk Parameter Updates - MKR on Aave V2 Ethereum
Vote Result: YES
Rationale
Chaos Labs have used their Asset Protection Tool to identify the possibility of a long attack on MKR on v2 Ethereum. Decreasing LT and LTV will reduce capital efficiency for MKR and mitigate attack vectors by increasing the capital required to wage a price manipulation attack. Moreso, these changes act as a motivation to shift usage to V3. The LT/LTV are only being decreased by 3% to make sure many user accounts do not get liquidated, and no accounts are eligible for liquidation. Lastly, according to Chaos Labs’ analysis, the impact on revenue is negligible , as the supply is relatively low at $14.3M. Borrow usage ATM is at ~51%, which can be translated to annualised protocol revenue in the 20-thousands. The potential loss in revenue is only hundreds of dollars.
Given the above, we will vote YES in favour of this proposal.