[ARC] - Chaos Labs Risk Parameter Updates - MKR on Aave V2 Ethereum - 2023.02.17

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ChaosLabs proposed adjustments to the Liquidation Threshold (LT) and Loan-To-Value (LTV) for the MKR asset on Aave V2 Ethereum to enhance security and promote transition to V3. The changes, which include reducing the MKR LT from 67% to 64% and the MKR LTV from 62% to 59%, will be implemented gradually and won't subject existing positions to liquidation; community members are encouraged to vote on these proposals.

The community has been engaged in a discussion regarding a proposal by ChaosLabs to adjust the Liquidation Threshold (LT) and Loan-To-Value (LTV) for the MKR asset on Aave V2 Ethereum. This proposal is part of a broader initiative to reduce the potential for various attack vectors on V2 assets. The proposed changes are designed to increase the capital required to launch a price manipulation attack on Aave and encourage users to transition to V3, which provides more robust risk mitigation measures.

The changes will be rolled out gradually to minimize disruption, with a maximum reduction of 3% in any given AIP. Importantly, no existing positions will be subject to liquidation as a result of the proposed changes. To facilitate community input, a Snapshot and AIP-174 have been published for voting, which will commence in 24 hours 1,2,3. The specific changes proposed include a reduction of the MKR Liquidation Threshold from 67% to 64% and a decrease in the MKR Loan-to-Value from 62% to 59%1.

In conclusion, this discussion represents a proactive approach to enhancing the security of Aave V2 Ethereum and promoting the transition to V3. The community's input is highly valued, and members are encouraged to participate in the upcoming vote on these proposed changes.

Posted 10 months ago

Last reply 9 months ago

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Last updated 06/12 00:43