We wanted to let the community know of a parameter change error resulting from AIP 55. The intent of AIP 55 was to enable FEI as collateral with initial parameters being an LTV of 50%, a Liquidation Threshold of 60%, and a Liquidation Bonus of 6.5%.
We noticed that the address for ENJ was used for AIP 55, not the address for FEI. As a result, these parameter changes were incorrectly applied to ENJ instead of FEI. FEI’s risk parameters were not updated, and FEI was not enabled as a collateral.
We are looking further into the impact of these parameter changes and are moving quickly to fix this issue, but in the meantime wanted to immediately inform the community. By 6PM Pacific Time today, we will follow up with more information as well as put up another governance proposal to reverse the parameter changes on ENJ and implement the intended changes for FEI.
Have there been any liquidations as a cause of this? The liquidation threshold was drawn down by 10% from the previous (Gauntlet Autogov), so I suspect there is at least some risk for some users.
I would suggest that there is a bit broader communication put out, because the fix will take a vote which will take a few days to be wrapped up, no?
Should at least be communicated on the @AaveAave Twitter account. There is no tweet out yet. And I would also suggest to not wait another 6 hours to do so.
There has been a clump up of liquidations since the 23rd, when the change was implemented.
To follow up, as discussed above we have posted an on-chain vote to revert ENJ parameter changes and to enable FEI as collateral on Aave V2. To inform the community more broadly of this proposal, we will send out a tweet shortly.
The AIP can be found here: Aave - Open Source Liquidity Protocol
We will provide more details later today regarding liquidations analysis and an explanation of how the error occurred. In addition, we will inform the community of the actions Gauntlet is taking to prevent this error and other types of errors in the proposal process moving forward.
As an update to the community, we are currently investigating the impact of this issue and our options for recourse to any affected users. We expect to post an update in the forums on this analysis by 5PM PT on 1/26. We are also conducting an internal review and will let the community know how we plan to avoid these issues in the future by 2/4.
As a quick update, we have conducted an investigation of on-chain liquidation data. In order to assess the effect of AIP 55 on an account level basis, we queried the blocks before and after each liquidation event and analyzed the accounts that were potentially impacted. We also analyzed the ENJ collateral owned by each account and the amount of collateral that was liquidated. We will provide the transaction-level data, results of the analysis, and a detailed recourse plan for potentially impacted Aave users by Friday 5PM Pacific Time.