Chaos Labs Risk Parameter Updates AaveV3
Chaos Labs Risk Parameter Updates AaveV3
Author
Chaos Labs
Creator
0x57ab7ee15cE5ECacB1aB84EE42D5A9d0d8112922
Simple Summary
A proposal to adjust ten (10) total risk parameters, including Loan-to-Value and Liquidation Threshold, across five (5) Aave V3 assets.
Motivation
Increasing the liquidation threshold and LTV for assets allows Aave to enhance users’ capital efficiency. However, this must be balanced with proper risk management to ensure that there is a sufficient buffer in the event of large drawdowns and/or liquidations. The analyses below were conducted utilizing our LT simulations, which showed either minimal or no increases in VaR at the recommended LT levels, while also considering user distribution and on-chain liquidity.
Specification
Gnosis
| Asset | Current LTV | Recommended LTV | Current LT | Recommended LT |
|---|---|---|---|---|
| GNO | 45% | 48% | 50% | 53% |
Optimism
| Asset | Current LTV | Recommended LTV | Current LT | Recommended LT |
|---|---|---|---|---|
| OP | 50% | 58% | 60% | 63% |
Arbitrum
| Asset | Current LTV | Recommended LTV | Current LT | Recommended LT |
|---|---|---|---|---|
| ARB | 50% | 58% | 60% | 63% |
Polygon
| Asset | Current LTV | Recommended LTV | Current LT | Recommended LT |
|---|---|---|---|---|
| stMATIC | 45% | 48% | 56% | 58% |
| MaticX | 45% | 50% | 58% | 60% |
References
- Implementation: AaveV3Polygon, AaveV3Optimism, AaveV3Arbitrum, AaveV3Gnosis
- Tests: AaveV3Polygon, AaveV3Optimism, AaveV3Arbitrum, AaveV3Gnosis
- Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.