In the recent discussion, Pauljlei from Gauntlet proposed a series of adjustments to risk parameters across multiple Aave V2 and Aave Arc assets. The aim of these changes is to align with the Moderate risk level chosen by the Aave community. The proposed changes include lowering the liquidation threshold for LINK and WETH, with the updates being driven by an optimization function that balances insolvencies, liquidations, and borrow usage. Gauntlet's simulations, which use a wide array of varied input data, inform these changes. The community has been encouraged to use Gauntlet’s Aave V2 Risk Dashboard to better understand the updated parameter suggestions and general market risk in Aave V2¹.

Pauljlei also explained the concepts of Value at Risk and Liquidations at Risk, and proposed to initiate a Snapshot vote, targeting an AIP on 2022-05-31. However, Emguoz from Blockchain at Berkeley raised concerns about the protection of users holding positions that might be in danger of liquidation post execution of the proposal. In response, Pauljlei assured that Gauntlet will postpone these parameter changes to give users additional time and notice to unwind positions that may be partially liquidated. He also mentioned that Gauntlet is working on a communications framework to better notify users of such parameter changes in the future.

Lastly, Pauljlei clarified that the Aave Arc (Fireblocks) parameter recommendations are separate from the V2 parameter changes and that an AIP with the set of parameter changes for Aave Arc will be resubmitted on 6/7/2022. This discussion reflects the community's commitment to maintaining a balance between risk and usability, while also ensuring transparency and user protection.