[TEMP CHECK] Raising the Safety Module’s Slashing Percentage

[tncintra]

Thanks for the feedback so far, and we are excited for the AMA on Thursday!

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@monet-supply

I think it is unlikely that reverting the change on max slashing would result in all or most of the people who withdraw putting their aave back in. This parameter change has some degree of risk, don’t think there’s any way around it unfortunately.

We agree there is some degree of risk. However, we suspect that the user profile of someone who is elastic to the slashing percentage will just as soon come back when the slashing percentage decreases as they left when the slashing percentage increased, especially given the lack of alternative investments for AAVE.

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@EzR3aL

Hi, did you think about the implications this could have with GHO and it’s growth?

At its core, the discount model for GHO in the safety module acts as an incentive for securing the Aave protocol, not as a tactic to grow GHO itself, per the original announcement:

@AaveLabs

Holders of stkAAVE can mint GHO at a discounted rate, meaning they will pay a lower interest rate on the GHO that they borrow. Therefore, there is an incentive to help secure the Aave Protocol as AAVE is staked (stkAAVE) into the protocol’s Safety Module.

However, this is an important point for discussion; thanks for flagging it . We are currently discussing with other community members, and we will provide a better informed opinion soon.

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@A_J

“We argue that, if the module must be slashed, the option to slash more AAVE is positive for AAVE price, and therefore positive for tokenholders generally.” @XenophonLabs

1. Is this argument valid only in the case of shortfall event?

2. If so, What is your view on AAVE price movement (a) as a consequence of the proposed implementation (b) in the absense of a shortfall event?

We can’t comment on the price of the AAVE token, but we can comment on the impact this proposal has on the costs to the Aave DAO. This proposal will reduce AAVE emissions/inflation, and generally improve the financial well-being of the protocol. We hope the community can decide for itself how this would affect the price of the AAVE token, outside the context of a slashing event.