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The discussion focused on improving the pricing mechanism for Liquid Staking Tokens (LSTs) on the Aave protocol, with proposals to use the Chainlink Synchronicity Price Adapter (CSPA) to prevent unintended liquidations. The proposed changes aim to enable higher LT values for each LST/base pair, increased borrow and supply caps, and more aggressive risk parameters, with the next steps including community feedback and moving to Snapshot for CPSA 2.0.
The discussion primarily revolved around the improvement of the pricing mechanism for Liquid Staking Tokens (LSTs) on the Aave protocol. Gauntlet and Bgdlabs proposed the use of the Chainlink Synchronicity Price Adapter (CSPA) to calculate the price for LST assets, aiming to prevent unintended liquidations due to differences in oracle price updates for LST and base assets1. The current solution, which uses two Chainlink price feeds, was identified as potentially problematic for LSTs, specifically stMATIC, maticX, and WMATIC, as a market downturn in the value of WMATIC could result in price deviations in the value of stMATIC and maticX, leading to potential liquidations1.
Several problems and potential solutions were identified in the context of stMATIC and MATIC, including price update ordering, transaction ordering, and illiquid markets. The CPSA 2.0 solution was proposed as a mitigation for these concerns1. Gauntlet also proposed a method to compute hypothetical "e-mode only supply caps" considering liquidity in both abnormal dislocations and normal price variance. The proposed changes aim to enable higher LT values for each LST/base pair, increased borrow and supply caps, and more aggressive considerations for their methodology in general as a result of price deviation smoothing1.
The discussion concluded with Gauntlet emphasizing their support for more aggressive risk parameters for LSTs if these changes are implemented. They believe that the suggested changes will correct incorrect assumptions made by other market participants. The next steps include welcoming feedback and questions from the community and moving to Snapshot for Chainlink Synchronicity Price Adapter CPSA 2.01.
Posted 7 months ago
Last reply 7 months ago
Summary updated 2 months ago
Last updated 09/12 13:52