[ARC] Gauntlet Risk Parameter Updates for Aave V2 ETH (2023-02-09)

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Gauntlet's risk simulation platform suggested reducing liquidation bonuses on Aave V2 ETH assets (CRV, USDC, STETH), but the community's preference for migrating to V3 ETH led to these changes not being implemented. Gauntlet continues to encourage the use of the Aave V2 Risk Dashboard for insights into market risks and parameter suggestions.

The discussion primarily revolved around Gauntlet's risk simulation platform's findings and the potential for reducing liquidation bonuses on three Aave V2 ETH assets. The assets in question were CRV, USDC, and STETH, with proposed reductions in liquidation bonuses from 8.0% to 7.5%, 4.5% to 3.7%, and 7.0% to 6.3% respectively. These recommendations were based on an optimization function that took into account various factors such as asset volatility, asset correlation, asset collateral usage, DEX / CEX liquidity, trading volume, expected market impact of trades, and liquidator behavior.

However, the community expressed a preference towards migrating to V3 ETH, leading Gauntlet to decide against proposing changes to these parameters. Despite this, Gauntlet continues to encourage the community to utilize the Aave V2 Risk Dashboard. This tool provides insights into the updated parameter suggestions and offers a comprehensive understanding of the general market risk in Aave V21.

In conclusion, while there was an opportunity to reduce liquidation bonuses on certain Aave V2 ETH assets, the community's preference for V3 ETH migration led to the decision not to implement these changes. The community is urged to stay informed about market risks and parameter suggestions through the Aave V2 Risk Dashboard.

Posted 10 months ago

Last reply 10 months ago

Summary updated 2 months ago

Last updated 04/12 00:18