Market Risk Monthly: Updates and Review (October 2021)

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Gauntlet has been actively managing market risk for Aave V2, resulting in a 14% reduction in Value at Risk (VaR) and savings for Aave protocol users. They've launched the Aave Risk Dashboard and are developing the Risk DAO to quickly respond to market conditions, with the community expressing appreciation for their efforts.

The discussion primarily revolved around the market risk associated with Aave V2, with Inkyamze from Gauntlet providing significant updates. Gauntlet has been actively managing the risk parameters for various assets, including USDC, WETH, REN, YFI, MKR, ZRX, UNI, WBTC, CRV, XSUSHI, ENJ, AAVE, MANA, and SNX. They have also launched the Aave Risk Dashboard, a tool that provides daily updates and helps the community understand the updated parameter suggestions and general market risk in Aave V2.

Two proposals were passed during the discussion, one to reduce liquidation bonuses for eleven Aave V2 assets, and another to adjust thirteen total risk parameters across nine Aave V2 assets. These measures have resulted in a 14% reduction in Value at Risk (VaR), and simulations show an average of 0.2% of Aave’s Total Value Locked (TVL) being at risk on any given day. In high volatility scenarios, these measures are expected to save Aave protocol users an average of $5,258,511 in liquidations. Since the first liquidation bonus updates, Gauntlet has saved Aave protocol users $188,253 in liquidations, which equates to $1,493,747 on an annualized basis.

Gauntlet is also developing the Risk DAO, a project aimed at identifying and implementing parameter updates more quickly to be more reactive to market conditions. The community, including Fig and JeremyKeating, expressed their appreciation for Gauntlet's efforts, particularly noting the impressive 14% reduction in VaR and expressing anticipation for the Risk DAO. The discussion concluded with a positive outlook on the ongoing efforts to manage and mitigate market risk in Aave V2.

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Last updated 03/12 08:01