[ARFC] Update GNO Risk Parameters on Aave V3 Gnosis Pool

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A proposal to update GNO risk parameters on Aave V3 Gnosis Pool aims to improve its utility and prepare for future developments, with community feedback suggesting a cautious approach due to liquidity risks and recent trust issues. The proposal has concluded the feedback phase and is moving to a Snapshot vote, with implementation contingent on a positive outcome.

What is this about?

The discussion is centered on a proposal to update the risk parameters for GNO (Gnosis token) on the Aave V3 Gnosis Pool. The proposal, initiated by MarcZeller1, suggests several changes aimed at improving the functionality and appeal of GNO within the Aave ecosystem. These changes include disabling Isolation Mode for GNO, enabling GNO borrowing, maintaining the current Loan to Value (LTV) and Liquidation Threshold, introducing a Reserve Factor of 20%, and setting a Borrow Cap of 24,000 GNO. The goal is to enhance GNO's utility, support Gnosischain decentralization, prepare for future GNO liquidity staking tokens (LSTs), and introduce a GNO-correlated e-mode for passive income opportunities.

How is the community reacting?

The community has shown a mix of support and caution towards the proposal. Gauntlet2 provided an analysis that pointed out the risks due to limited wETH liquidity against USD stablecoins on the GnosisChain and recommended a cautious approach to GNO borrowing. ChaosLabs3 supported the proposal with a conservative initial borrow cap and suggested interest rate curves in line with other governance tokens, while advising to keep GNO in isolation mode due to market conditions. MarcZeller4 raised concerns about the proposed interest rate curve being too favorable for borrowers and suggested maintaining isolation mode and conservative borrow caps. ChaosLabs5 agreed to launch with Aave's recommended interest rate parameters, given the conservative borrow caps and other parameters, and highlighted the importance of monitoring GNO's usage and impact on Aave, with a readiness to adjust based on market data.

Why this is positive?

  • Enhances GNO utility and supports Gnosischain decentralization.
  • Prepares for future GNO LSTs and introduces GNO-correlated e-mode for passive income.
  • Community members are collaborating and considering conservative approaches to mitigate risks.

Why this is negative?

  • Limited wETH and USD stablecoin liquidity on GnosisChain poses high risks.
  • A recent Balancer V2 pool hack has impacted user trust and liquidity.
  • A significant portion of GNO is supplied by a single account, which could affect market dynamics.

Next actions

The community feedback phase has concluded, and the proposal has moved to the ARFC Snapshot phase. Voting is scheduled to begin tomorrow [[ACI]6.](https://governance.aave.com/u/ACI]6.) If the snapshot vote is positive, the proposal will proceed to an AIP vote for implementation.

Posted 19 days ago

Last reply 4 days ago

Summary updated 4 days ago

Last updated 09/12 13:52