Aave

Summary

To optimize risk/reward tradeoffs, change Stablecoin E-mode parameters to 95% LT, 93% LTV, 1% LB.

Please see Gauntlet’s E-Mode methodology here for the full forum discussion.

Motivation

On Aave V3, E-mode requires multiple considerations, including mitigating tail risks to protocols, optimizing user experience, and allowing on-chain liquidity to remain robust. E-mode, in particular, unlocks capital efficiency with specific risk tradeoffs.

Specification

These changes apply to V3 Avalanche, Optimism, Polygon, and Arbitrum.

The complete list of updates are:

• Avalanche:
  1. Lower Stablecoin E-Mode LT from 97.5% to 95%.
  2. Lower Stablecoin E-Mode LTV from 97% to 93%.
• Optimism:
  1. Lower Stablecoin E-Mode LT from 97.5% to 95%.
  2. Lower Stablecoin E-Mode LTV from 97% to 93%.
• Polygon:
  1. Lower Stablecoin E-Mode LT from 97.5% to 95%.
  2. Lower Stablecoin E-Mode LTV from 97% to 93%.
• Arbitrum:
  1. Lower Stablecoin E-Mode LT from 97.5% to 95%.
  2. Lower Stablecoin E-Mode LTV from 97% to 93%.

Note that the Stablecoin E-Mode LB is already 1% across all four aforementioned chains, and that Stablecoin E-Mode has category ID = 1 across all four aforementioned chains.

We recommend that users adjust their positions accordingly.

Implementation

The proposal implements changes on Aave V3 Optimism, Polygon, and Arbitrum using the following pre-deployed payloads:

• Optimism: 0xf22c8255ea615b3da6ca5cf5aecc8956bff07aa8
• Arbitrum: 0x142dcaec322aaa25141b2597bf348487adbd596d
• Polygon: 0x24bdacf6bbebaf567123da16cdb79a266597e92b

Changes on Avalanche can be implemented using the pre-deployed steward located at 0xfc7b55cc7c5bd3ae89ac679c7250ab30754c5cc5

Copyright

Copyright and related rights waived via CC0.

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