[ARFC] Chaos Labs - CRV V2 Ethereum Deprecation Plan

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ChaosLabs proposed a gradual reduction of the Loan-to-Value (LT) of the CRV market on Aave V2 Ethereum to address the Vyper Exploit, with bi-weekly analyses and recommendations by DAO risk managers. A Snapshot vote has been posted to decide on the reduction approach, with options based on Chaos Labs' and Gauntlet’s recommendations, and a significant repayment and withdrawal by account 0x7a...5428 has improved the health of the CRV market.

The discussion primarily revolves around the proposal by ChaosLabs to gradually reduce the Loan-to-Value (LT) of the CRV market on Aave V2 Ethereum, in response to the Vyper Exploit. The plan involves bi-weekly analyses and recommendations by DAO risk managers for each LT reduction. In case of a consensus, the proposal would proceed to an Aave Improvement Proposal (AIP), otherwise, the more conservative approach would be adopted, with the alternative proposal put to a Snapshot vote1.

ChaosLabs has suggested a Snapshot vote on 08.14.2023 to decide on the community’s preferred path forward. The options are based on Chaos Labs' and Gauntlet’s recommendations. Chaos Labs proposes a bi-weekly AIP to decrease LT, with a maximum reduction of 10%. Gauntlet has two schedules, both proposing a weekly AIP to reduce LT by 5% under certain conditions2. Both Gauntlet and ChaosLabs have agreed to move forward with bi-weekly CRV LT reductions, following independent analyses and consolidated recommendations from both parties5. A Snapshot vote for the community to approve a direct-to-AIP framework for the forthcoming reductions has been posted, with voting starting in 24 hours5.

In a recent update, ChaosLabs reported that account 0x7a...5428 has repaid 10M USDT and withdrawn nearly 90M CRV, resulting in a healthier state for the CRV market on Aave V2 Ethereum8. They plan to include recommendations for further CRV LT reductions within the broader Aave V2 markets deprecation plan to reduce governance overhead8. This marks a significant step towards the resolution of the issues arising from the Vyper Exploit.

Posted 4 months ago

Last reply 2 months ago

Summary updated 2 months ago

Last updated 03/12 08:00