Simple Summary

A proposal to increase stablecoin Interest Rate parameters across all Aave deployments.

Motivation

Following the implementation of AIP-375 to increase stablecoin borrow rates across Aave V2 and V3 deployments, we continue to observe volatility in borrow rates across Aave deployments. As we highlighted in the recent proposal, we recommend a more aggressive increase of the Slope1 parameter to stabilize borrows under the UOptimal point.

Adjust Slope1 of stablecoins to 6%

The analysis indicates a necessity for further refinement of stablecoin interest rates, to achieve a more predictable and stable borrowing rate with an equilibrium utilization under the UOptimal point. Therefore, we propose increasing Slope1 to 6% for stablecoins across all Aave deployments, in this iteration. Following this increase, we will continue monitoring the usage and equilibrium rate and make additional recommendations as necessary.

Specification

Market	Asset	Current Slope1	Rec Slope1
Ethereum V2	USDC	5%	6%
Ethereum V2	USDT	5%	6%
Ethereum V2	DAI	5%	6%
Ethereum V2	FRAX	5%	6%
Ethereum V2	sUSD	5%	6%
Ethereum V2	GUSD	5%	6%
Ethereum V2	LUSD	5%	6%
Ethereum V2	USDP	5%	6%
Ethereum V3	USDC	5%	6%
Ethereum V3	USDT	5%	6%
Ethereum V3	DAI	5%	6%
Ethereum V3	FRAX	5%	6%
Ethereum V3	LUSD	5%	6%
Avalanche V2	USDC	5%	6%
Avalanche V2	USDT	5%	6%
Avalanche V2	DAI	5%	6%
Avalanche V3	USDC	5%	6%
Avalanche V3	USDT	5%	6%
Avalanche V3	DAI	5%	6%
Avalanche V3	MAI	5%	6%
Avalanche V3	FRAX	5%	6%
Polygon V2	USDC	5%	6%
Polygon V2	USDT	5%	6%
Polygon V2	DAI	5%	6%
Polygon V3	USDC.e	7%	No Change
Polygon V3	USDC	5%	6%
Polygon V3	USDT	5%	6%
Polygon V3	DAI	5%	6%
Polygon V3	MAI	5%	6%
Optimism V3	USDC.e	7%	No Change
Optimism V3	USDC	5%	6%
Optimism V3	USDT	5%	6%
Optimism V3	DAI	5%	6%
Optimism V3	sUSD	5%	6%
Optimism V3	LUSD	5%	6%
Optimism V3	MAI	5%	6%
Arbitrum V3	USDC	5%	6%
Arbitrum V3	USDC.e	7%	No Change
Arbitrum V3	USDT	5%	6%
Arbitrum V3	DAI	5%	6%
Arbitrum V3	LUSD	5%	6%
Arbitrum V3	FRAX	5%	6%
Arbitrum V3	MAI	5%	6%
Base V3	USDC	5%	6%
Base V3	USDbC	7%	No Change
Metis V3	USDC	5%	6%
Metis V3	USDT	5%	6%
Gnosis V3	USDC	5%	6%
Gnosis V3	xDAI	5%	6%

References

• Implementation: AaveV2Ethereum, AaveV2Polygon, AaveV2Avalanche, AaveV3Ethereum, AaveV3Polygon, AaveV3Avalanche, AaveV3Optimism, AaveV3Arbitrum, AaveV3Metis, AaveV3Base, AaveV3Gnosis
• Tests: AaveV2Ethereum, AaveV2Polygon, AaveV2Avalanche, AaveV3Ethereum, AaveV3Polygon, AaveV3Avalanche, AaveV3Optimism, AaveV3Arbitrum, AaveV3Metis, AaveV3Base, AaveV3Gnosis
• Snapshot
• Discussion

Disclaimer

Chaos Labs has not been compensated by any third party for publishing this ARFC.

Copyright

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