Extend Dynamic Risk Parameters to Aave Arc

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Inkyamze proposed extending Gauntlet's Dynamic Risk Parameters service to Aave Arc for improved market risk management, driven by significant institutional interest. The proposal, which includes setting up a separate instance for Fireblocks' markets and ensuring legal considerations, received widespread community support, although the necessity of an on-chain AIP was questioned.

The discussion primarily revolved around the proposal by Inkyamze to extend Gauntlet’s Dynamic Risk Parameters service to Aave Arc for continuous market risk management. This proposal was driven by the significant institutional interest in Aave Arc and the need for optimized yield, capital efficiency, and mitigation of depositor losses. The proposed next steps include setting up a separate instance for Fireblocks’ markets, calibrating and refitting the new instance models, generating new parameter recommendations, and ensuring legal considerations are cleared. The proposal also suggests proceeding with an ARC (request for comments), Snapshot poll, and AIP1.

The proposal received widespread support from the community. ChriSEBA highlighted the usefulness of Gauntlet’s assessment and recommendations for risk management under specific market conditions2. Eboado also backed the proposal, particularly due to the institutional interest in Arc and the extension of Gauntlet's existing work in Aave. However, they questioned the necessity of an on-chain AIP3. Alex_BertoG commended Gauntlet's high standards in risk modelling and stress testing, and expressed full support for the proposal4.

In response to Eboado's query, Inkyamze clarified that the AIP could be omitted from the Arc parameter update process if the community and whitelister preferences lean in that direction. The initial inclusion of the AIP was intended to provide a clear “handoff” of the updated risk parameters for the associated Arc markets and to ensure the forthcoming Terms of Service are confirmed on-chain5. This discussion signifies a positive step towards enhancing the risk management capabilities of Aave Arc.

Posted 2 years ago

Last reply 2 years ago

Summary updated 2 months ago

Last updated 08/12 04:39