[ARFC] TUSD Offboarding Plan

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The Aave V2 Ethereum pool is considering a proposal to offboard TUSD due to its unfavorable risk/reward ratio, with changes including reducing the LTV to 0% and disabling borrowing. The community largely supports the proposal, which has moved to the Snapshot stage for voting, despite concerns about potential negative impacts on those shorting TUSD.

The discussion primarily revolves around the proposal to offboard TUSD from the Aave V2 Ethereum pool, a plan put forth by Gauntlet and Marczeller. This proposal was motivated by recent events and the ACI's suggestion, with the aim to encourage users to migrate their positions to other stablecoins on Aave. The proposal outlines changes to the TUSD risk parameters, including reducing the LTV to 0%, increasing the liquidation bonus to 10%, and disabling borrowing1. Three options were presented to lower LT, each with potential forced liquidations. The proposal, powered by Skyward, also highlighted the unfavorable risk/reward ratio of TUSD1.

Community feedback was largely supportive of the offboarding plan. MarcZeller expressed support for the proposal and indicated a preference for Option 1, which proposes lowering LT to 75% with no forced liquidations, as it is the least harmful to Aave users2. This sentiment was echoed by 0xkeyrock.eth, who also supported the offboarding of TUSD due to its current risks3. However, Skyzer raised concerns about the potential negative impact on those who have borrowed TUSD and are shorting it, as the proposal could increase their interest rate to 200%5.

The proposal has since been escalated to the Snapshot stage, with voting set to commence the following day4. The community awaits the outcome of the vote, which will determine the future of TUSD within the Aave V2 Ethereum pool. The discussion underscores the importance of risk management in the crypto space and the need for community involvement in decision-making processes.

Posted 5 months ago

Last reply 3 months ago

Summary updated 2 months ago

Last updated 03/12 08:00