[ARC] Gauntlet Risk Parameter Updates for Aave V2 ETH (2023-01-12)

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Pauljlei recommends no changes to Aave V2 ETH parameters this week, based on Gauntlet's optimization function and the community's Risk Off Framework. A significant account's (0x7a...5428) reduced borrow usage and CRV token supply further mitigates risk, with the community urged to refer to Gauntlet's Aave V2 and Arc Risk Dashboards for a comprehensive understanding of market risk.

In the recent discussions, Pauljlei has suggested no alterations to the Aave V2 ETH parameters for the current week. This recommendation is based on Gauntlet's routine parameter suggestions, which are driven by an optimization function that balances insolvencies, liquidations, and borrow usage. The community has collectively agreed on a Risk Off Framework, which involves lowering liquidation thresholds. The simulations run by Gauntlet utilize a broad spectrum of dynamic input data, including factors like asset volatility, asset correlation, asset collateral usage, DEX / CEX liquidity, trading volume, expected market impact of trades, and liquidator behavior.

In addition to this, Pauljlei has conducted a user position analysis, spotlighting a significant account (0x7a...5428) that corresponds to a large CRV supplier. The borrow usage of this user has seen a decline as the CRV price has surged. They have also recently reduced their CRV token supply, which further mitigates risk.

For a more comprehensive understanding of the updated parameter suggestions and the general market risk in Aave V2, the community is encouraged to refer to Gauntlet's Aave V2 Risk Dashboard and Aave Arc Risk Dashboard. The community's approval of this proposal would indicate agreement to Gauntlet's terms of service1. This discussion has been instrumental in maintaining the balance of the system and ensuring the risk is managed effectively.

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Last updated 06/12 00:43