[ARC] Gauntlet Interest Rate Curve Changes for Aave V3 Markets (Feb 2023)

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Pauljlei proposed adjustments to interest rate parameters and reserve factors for assets on Aave's V3 markets based on Gauntlet's evaluation, aiming to optimize the protocol's stability and profitability. The proposal, which passed a Snapshot vote, included decreasing risk for five tokens (USDT, MAI, FRAX, EURS, agEUR) and increasing reserve factors for two tokens (GHST, DPI) to boost Aave's revenue.

The discussion revolved around a proposal by Pauljlei to adjust interest rate parameters and reserve factors for assets on Aave's active V3 markets, including Arbitrum, Avalanche, Optimism, and Polygon. The proposal was based on Gauntlet's evaluation of all assets on Aave V3, identifying opportunities to adjust parameters for certain assets for the benefit of the protocol. The methodology used for this analysis is the same as the one used for the Aave V2 Ethereum market interest rate curve changes proposed last November. The proposal also analyzed concentration risk and relative reserve sizing to consider the risks posed by the current suppliers.

Pauljlei identified 5 tokens (USDT, MAI, FRAX, EURS, agEUR) that would benefit from decreased risk and 2 tokens (GHST, DPI) which present an opportunity to capture additional reserves. He proposed changing the interest rate curves of USDT, FRAX, MAI, EURS, and agEUR to use safer parameters, which would serve to derisk the IR curves of stablecoins that are less established, have less liquidity, or have had recent issues. He also recommended raising the reserve factors of GHST and DPI from 0.2 to 0.35 to boost revenue for the Aave protocol.

The proposal was put to a Snapshot vote, which passed, and Gauntlet, in collaboration with Bgdlabs, began preparing an on-chain proposal. Pauljlei confirmed the implementation of the Aave V3 interest rate curve changes, including the AVAX V3 changes via Guardian. He thanked the community for their participation in this proposal to optimize the protocol. This discussion and subsequent actions demonstrate the community's commitment to continuously evaluate and adjust parameters to ensure the protocol's stability and profitability.

Posted 10 months ago

Last reply 8 months ago

Summary updated 2 months ago

Last updated 08/12 04:39