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ChaosLabs proposed modifications to fourteen risk parameters across six Aave V3 Ethereum assets to optimize values, potentially boosting borrowings by around $3.6M with minimal increase in VaR and Extreme VaR. A community vote, initiated by ChaosLabs, will determine the implementation of these changes, marking a significant moment in the evolution of the Aave V3 Ethereum assets.
In a recent discussion, ChaosLabs put forward a proposal to modify fourteen risk parameters across six Aave V3 Ethereum assets, including WETH, WBTC, DAI, USDC, LINK, and WSTETH. The proposed changes, which are based on comprehensive simulations run by Chaos Labs' Parameter Recommendation Platform, aim to optimize values to increase protocol borrow usage while minimizing losses from liquidations and bad debt. The simulations indicate that these adjustments could potentially boost borrowings by around $3.6M, with a negligible increase in VaR and Extreme VaR. The changes are capped at ±3% for all parameters to ensure controlled modifications and to facilitate the analysis of their impact on user behavior1.
The specific proposed changes include adjustments to the Liquidation Threshold and Loan-to-Value for all six assets, and the Liquidation Penalty for WBTC and LINK. For instance, for WETH, the Liquidation Threshold would be increased from 82.5% to 83%, and the Loan-to-Value from 80% to 80.5%. Similarly, for WBTC, the Liquidation Threshold would be raised from 75% to 78%, the Loan-to-Value from 70% to 73%, and the Liquidation Penalty would be reduced from 6.25% to 5%1.
The proposal has garnered support from 0xkeyrock.eth2 and a community vote on the proposal has been initiated by ChaosLabs. The voting period commenced on Thursday, May 25, 2023, and is set to conclude on Sunday, May 28, 20233. The outcome of this vote will determine the implementation of these proposed changes, marking a significant moment in the ongoing evolution of the Aave V3 Ethereum assets.
Posted 7 months ago
Last reply 5 months ago
Summary updated 2 months ago
Last updated 06/12 00:43