LBS Blockchain Society Delegate Platform

[ARFC] Aave v3 Polygon wMATIC Interest Rate Update

Vote Result: YES

Rationale

Increasing utilisation of wMATIC will increase revenue for Aave, and the strategy itself is straightforward in lowering rates against staking yield to incentivise borrowing from Aave v3 Polygon’s liquidity pool. Moreover, the methodologies presented by Chaos Labs to adjust first the SupplyCap of wMATIC on v3 and consequently the BorrowCap seem appropriate. The huge increase in SupplyCap is sensible since Liquidity Mining is due to begin which will stimulate demand and the new SupplyCap of 47M accounts for the new deposits and leaves space for all the wMATIC on v2 to migrate across.

It is important to note Gauntlet’s concern that the proposed interest rate at the optimal point is lower than the current APR of stMATIC (6.3%) on Lido, which will lead to lending pool utilization above the optimal point and can lead to more volatile interest rates and increase the risk of failed atomic liquidations. However, since there is a discrepancy between Lido, Stader and Polygon Foundation’s front end on the stMATIC APR, the proposed APR of 6.1% is higher than the APR reported by Stader and Polygon Foundation and seems correct to use.

Therefore, we are voting YES in favour of this proposal.

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