The discussion has been centered around the proposal by Alice to introduce the KNC token from Kyberswap to the AaveV3 Ethereum market in isolation mode¹. This move is driven by the success of KyberSwap, a multi-chain DEX aggregator and concentrated liquidity platform with an average of 500K web visitors per month, deployed on 14 chains, and a total trading volume exceeding $21B. The current total value locked (TVL) on all chains is over $60M. The addition of KNC, Kyber’s utility and governance token, to Ethereum V3 in isolated mode would allow KNC holders to borrow stablecoins by leveraging their KNC position, attracting new KNC deposits and creating a new revenue stream for Aave while limiting exposure¹.

The proposed parameters for this addition, as per Gauntlet and ChaosLabs’s recommendations, include enabling isolation mode, collateral, and borrowing, with a supply cap of 1.2 million KNC, a borrow cap of 650,000 KNC, and a debt ceiling of 1M$. Other parameters such as LTV, LT, liquidation bonus, and various rates were also specified¹. Gauntlet expressed support for these proposed parameters². The discussion then moved towards gathering community feedback and Gauntlet's recommendations on this ARFC, publishing a snapshot of the risk providers recommendations, and if successful, escalating to an AIP¹.

The latest update from Alice indicates that the ARCF has been escalated to the snapshot stage, with a link to the proposal on snapshot.org provided³. This marks a significant step forward in the process, indicating that the proposal is moving closer to implementation, pending community approval.