Increase Borrow Slope1 to all Stablecoins across all Aave Instances

Increase Borrow Slope1 to all Stablecoins across all Aave Instances

Author

Aave Chan Initiative

Creator

0x57ab7ee15cE5ECacB1aB84EE42D5A9d0d8112922

Simple Summary

This proposal recommends increasing the borrow slope1 parameter for stablecoins across all Aave V3 Instances and Aave V2 on mainnet to 12.5%. This adjustment aims to align interest rate models with the updated Stable Debt Reserve (SDR) strategy, promoting sustainability, better risk management, and optimal utilization of the protocol’s resources.

Motivation

The current market environment presents a unique opportunity to optimize Aave’s interest rate parameters. With the introduction of sUSDe as E-Mode collateral and general market sentiment leading to higher desire for borrowing, we are seeing significantly higher utilisation in the stablecoin market. This adjustment to the borrow slope1 will better align Aave’s interest rates with prevailing market conditions, potentially leading to:

  • Increased protocol revenue through better rate optimization
  • Enhanced capital efficiency by maintaining competitive lending rates at lower volatility.

Additionally, this change will ensure appropriate risk compensation for stablecoin lenders.

Specification

MarketAssetCurrent Slope1Recommended Slope1Current Slope2Recommended Slope2
Ethereum V2USDC5.5%12.5%60%-
Ethereum V2USDT5.5%12.5%100%-
Ethereum V2DAI5.5%12.5%75%-
Ethereum V3 CoreUSDC5.5%12.5%75%35%
Ethereum V3 CoreUSDT5.5%12.5%75%35%
Ethereum V3 CoreUSDe9.0%12.5%75%50%
Ethereum V3 CoreFRAX5.5%12.5%75%40%
Ethereum V3 CoreDAI5.5%12.5%75%35%
Ethereum V3 CoreLUSD5.5%12.5%87%50%
Ethereum V3 CorePYUSD5.5%12.5%80%50%
Ethereum V3 CorecrvUSD5.5%12.5%80%50%
Ethereum V3 PrimeUSDC5.5%12.5%60%35%
Ethereum V3 EtherFiUSDC6.5%12.5%60%40%
Ethereum V3 EtherFiPYUSD5.5%12.5%80%40%
Ethereum V3 EtherFiFRAX5.5%12.5%80%40%
Avalanche V3USDC5.5%12.5%60%40%
Avalanche V3USDT5.5%12.5%75%40%
Avalanche V3DAI5.5%12.5%75%40%
Avalanche V3FRAX5.5%12.5%75%40%
Polygon V3USDC5.5%12.5%60%40%
Polygon V3USDC.e10.0%13.5%80%40%
Polygon V3USDT5.5%12.5%75%40%
Polygon V3DAI5.5%12.5%75%40%
Polygon V3EURS5.5%12.5%75%50%
Optimism V3USDC5.5%12.5%60%40%
Optimism V3USDT5.5%12.5%75%40%
Optimism V3DAI5.5%12.5%75%40%
Optimism V3sUSD5.5%12.5%75%50%
Optimism V3LUSD5.5%12.5%87%50%
Optimism V3USDC.e6.5%13.5%80%40%
Arbitrum V3USDC5.5%12.5%60%40%
Arbitrum V3USDC.e6.5%13.5%80%40%
Arbitrum V3USDT5.5%12.5%75%40%
Arbitrum V3DAI5.5%12.5%75%40%
Arbitrum V3LUSD5.5%12.5%87%50%
Arbitrum V3FRAX5.5%12.5%75%40%
Arbitrum V3GHO12%12.5%65%40%
Base V3USDC5.5%12.5%60%40%
Base V3USDbC10.0%13.5%80%40%
Metis V3m.USDC6.0%12.5%60%40%
Metis V3m.USDT6.0%12.5%75%40%
Metis V3m.DAI7.0%12.5%75%50%
BNB Chain V3USDT5.5%12.5%75%40%
BNB Chain V3USDC5.5%12.5%60%40%
BNB Chain V3FDUSD5.5%12.5%75%40%
Scroll V3USDC5.5%12.5%60%40%
Gnosis V3WXDAI5.5%12.5%75%40%
Gnosis V3USDC5.5%12.5%75%40%
Gnosis V3EURe5.5%12.5%75%50%
Gnosis V3USDC.e9%13.5%75%40%
ZKSync V3USDC5.5%12.5%60%40%
ZKSync V3USDT5.5%12.5%60%40%

References

Copyright

Copyright and related rights waived via CC0.

by BGD Labs