Aave

Simple Summary

Gauntlet’s E-Mode methodology and forum discussion can be found here.

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.

Please refer to Gauntlet’s forum post for discussion on factors such as short-term and long-term correlation, arbitraguer profitability, abnormal vs. normal price variances, and assumptions on the redemption mechanism.

This is a temperature check to see if the community would like to add E-Mode specific supply/borrow caps. Specifically, to include supply/borrow caps exclusive to a specific E-mode, different from the caps of the same assets in non-E-mode.

This functionality is not possible at the moment, but may be implemented on the protocol to enable more fine-tuned risk controls, if the community approves.

This proposal does not recommend any specific supply or borrow cap parameter changes. Rather, this proposal is only to align on the community’s willingness to add the functionality of E-mode specific caps, and the community can then set parameter values later.

Specification:

• Option 1: Add E-Mode Specific Supply/Borrow Caps
• Option 2: Do not add E-Mode Specific Supply/Borrow Caps
• Abstain
• Nay