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title: “Aave V2 Ethereum LT Reduction” author: “Chaos Labs - @yonikesel” discussions: “https://governance.aave.com/t/arfc-v2-ethereum-lt-reductions-10-27-2023/15249”

Simple Summary

A proposal to reduce Liquidation Threshold (LT) on Aave V2 Ethereum.

Motivation

In accordance with the v2 deprecation framework, Chaos Labs and Gauntlet advise implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum

LT Reductions

The recommendations below suggest an LT configuration that optimizes reductions without significantly increasing the number of accounts eligible for liquidation. The proposed values are set at a margin of at least ~4% from the closest LT figure, which would trigger more substantial liquidations.

This will affect 20 accounts, leading to a cumulative liquidation of $1,101 in collateral value.

Asset	Current LT	Rec LT	Value Liquidated ($)	Accounts Liquidated
1INCH	24%	1%	163	1
BAL	25%	21%	43	2
BAT	1%	1%	0	0
CRV	42%	38%	10	1
CVX	33%	30%	0	0
DPI	16%	14%	36	1
ENJ	50%	50%	0	0
ENS	50%	47%	2	1
MANA	48%	37%	28	1
MKR	35%	30%	149	1
REN	27%	25%	57	1
SNX	43%	41%	28	1
UNI	70%	64%	0	0
xSUSHI	28%	1%	270	9
YFI	45%	43%	0	0
ZRX	37%	34%	315	1
LINK	82%	81%	0	0

As Liquidation Threshold reductions may lead to user accounts being eligible for liquidations upon their approval, we want to clarify the full implications to the community at each step. Chaos Labs will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution.

Specification

Frozen Assets:

Asset	Current LT	Rec LT
1INCH	24%	1%
BAL	25%	21%
BAT	1%	1%
CRV	42%	38%
CVX	33%	30%
DPI	16%	14%
ENJ	50%	50%
ENS	50%	47%
MANA	48%	37%
MKR	35%	30%
REN	27%	25%
SNX	43%	41%
UNI	70%	64%
xSUSHI	28%	1%
YFI	45%	43%
ZRX	37%	34%
LINK	82%	81%

References

• Implementation: AaveV2Ethereum
• Tests: AaveV2Ethereum
• [Snapshot](Direct to AIP)
• Discussion

Disclaimer

Chaos Labs and Gauntlet have not been compensated by any third party for publishing this ARFC.

Copyright

Copyright and related rights waived via CC0.