The discussion primarily revolved around the proposal by Inkyamze to adjust nine risk parameters across eight Aave V2 assets, including Loan To Value (LTV), Liquidation Threshold, and Liquidation Bonus. This proposal is part of Gauntlet’s regular parameter recommendations, which aim to balance the overall risk tolerance of the protocol while making risk trade-offs between specific assets. The proposed changes were driven by volatility and exchange volume data from 10/07 to 10/14¹.

The community had several questions about the proposal, particularly around the consistent decrease in liquidation bonuses. DefiUser raised this concern, to which Pauljlei responded that Gauntlet’s simulations found many of the liquidation bonuses to be too high, regardless of volatility. He explained that the liquidation bonus is more dependent on the slippage in liquidity sources, which poses the biggest risk for a liquidator trying to offload liquidated assets. To avoid shocking the ecosystem, small successive reductions in liquidation bonuses are recommended over time⁴.

Pauljlei also provided a JSON of the proposed parameter recommendations for the community's convenience and shared the addresses and LTV values for several cryptocurrencies⁵. He clarified that the adjustments to LTV and Liquidation Threshold were not aimed at reducing incentives for liquidators, but rather to decrease the size of total collateral on the protocol and reduce the probability of liquidation cascades⁷. The discussion concluded with the initiation of a Snapshot and the targeting of an AIP on 2021-10-18¹.