LlamaRisk - Monthly Community Update

[LlamaRisk]

LlamaRisk - Monthly Community Update

February 2025

Overview

LlamaRisk presents our February 2025 monthly update, summarizing key activities and outlining upcoming priorities.

Highlights

Recommendations and inputs

Asset onboarding

• [ARFC] Add bCSPX to Aave V3 Gnosis Instance - Recommended onboarding as collateral-only, highlighted pricing concerns, and provided legal commentary on regulatory implications for Aave.
• [ARFC] Onboard tBTC to Aave v3 on Arbitrum - Supported onboarding with a focus on using the BTC/USD feed for pricing and recommended a trigger switch mechanism with a PoR feed for user protection.

New Chain

• [ARFC] Deploy Aave v3 on Ink - Supported onboarding while highlighting the early-stage DeFi ecosystem (low TVL) and non-availability of Chainlink data feeds.
• [ARFC] Deploy Aave v3 on Sonic - Supported increasing LTV, supply, and borrow caps for assets on Sonic.

GHO related

• [TEMP CHECK] GHO Gas Token Framework - Endorsed the framework, emphasizing the planned native bridge and additional functions aimed at increasing GHO usage and supply.
• [ARFC] Deploy stataUSDC GSM on Base - Supported deployment with 0% swap fees while cautioning about potential unexpected volatility in GSM deposits.
• [ARFC] USDT GSM Bucket and Exposure Cap increase - Analyzed Sky PSMs to explore the “piggy bank” thesis for GSM.
• [ARFC] Update USDS & GHO Borrow Rate - Supported the reduction, citing a broader market trend of declining borrow interest rates.

E-modes

• [ARFC] Add sUSDE to Aave V3 Base Instance - Supported onboarding with conservative parameters and alignment with Aave Core’s sUSDe stablecoin E-Mode setup while emphasizing the low sUSDe supply on Base.
• [ARFC] Onboard pufETH to Aave V3 Core Instance - Supported onboarding while highlighting its primary use case for leveraged looping with wstETH under E-Mode.

Misc.

• [ARFC] Chaos Labs Risk Parameters Update - AUSD on V3 Avalanche - Highlighted the non-existent bug bounty program from Agora while supporting the parameter change for AUSD.
• [ARFC] Risk Steward Parameter Updates Phase 3 - Supported the collective parameter changes to fasten governance processes and enhance adaptability.
• [ARFC] Pendle Principal Token Risk Oracle - Emphasized separating pricing infrastructure from risk functions, recommended conservative exposure until Umbrella integration, and suggested an ELB pricing approach.
• [ARFC] Update AAVE Token LTV/Liquidation Percentages - Endorsed increasing AAVE’s LT/LTV based on strong market liquidity and potential future integration with the Umbrella system.
• [ARFC] Core & Base - BTC Correlated Asset Update - Suggested adjustment in LBTC parameters on Base due to insufficient liquidity and disable borrowing.
• [ARFC] Prime Instance - Restore ETH LTV - Supported the LTV restoration, anticipating its primary use case as borrowing stablecoins.
• [ARFC] Aave V2 Deprecation Update - Disable New Borrows, IR Curve and Reserve Factor Adjustments - Supported the changes while recommending the next step of disabling new borrows on all assets to accelerate V2 deprecation.

Research and analysis

• Bybit Incident Post-Mortem: Ethena’s Risk Mitigation and Resilience - Analyzed risk mitigation measures from Ethena during the recent hack, which is significant due to Aave’s substantial exposure to sUSDe and USDe.

Community Engagement

• ETH Denver Stable Summit - Delivered a talk exploring stablecoin and asset risks in DeFi, emphasizing qualitative risk assessment methodologies.
• Newsletter: This Week in Aave - Launched a weekly newsletter providing a concise roundup of Aave governance updates for stakeholders and users.

Upcoming Focus Areas

• Operation Spring Cleaning - Introducing a rating system and a new dashboard for existing partners, focusing on delivering clear recommendations on critical security metrics for assets across DeFi.
• Preparing for Umbrella release and methodology for optimal capitalization per asset.

We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.