Aave

Summary

Gauntlet recommends parameter changes on Aave V3 Avalanche, Arbitrum, Polygon, Optimism. For more details, see the full forum post here.

Motivation

Given the recent MAI/MIMATIC price drop and its inability to regain peg for the past few months, Gauntlet recommends to begin deprecation of MAI/MIMATIC. We aim to do so by reducing LT and increasing borrow rates to incentivize repayment.

Specification

Option 1: Conservative LT Reduction

chain	asset	old_LT	new_LT	liquidatable_accounts
avalanche	MAI/MIMATIC	0.8	0	$200
arbitrum	MAI/MIMATIC	0.8	0.73	0
polygon	MAI/MIMATIC	0.8	0.65	$30
optimism	MAI/MIMATIC	0.8	0.8	0

Option 2: Aggressive LT Reduction

chain	asset	old_LT	new_LT	liquidatable_accounts
avalanche	MAI/MIMATIC	0.8	0	$200
arbitrum (*)	MAI/MIMATIC	0.8	0	$1,500
polygon	MAI/MIMATIC	0.8	0	$1,000
optimism	MAI/MIMATIC	0.8	0.65	$1,900

( * ) Any LT reduction between 7% to 80% will yield $1500 in liquidatable accounts for Arbitrum.

Adjust Uopt to 0.45, Slope 2 to 300%, RF to 95%

chain	supplied	borrowed	current_util	current_borrow_rate	recommended_uopt	recommended_slope2	new_borrow_rate (%)
polygon	533630	513560	96%	65%	0.45	3	282.18
arbitrum	22300	20000	90%	41%	0.45	3	249.45
optimism	370000	354970	96%	65%	0.45	3	282.18
avalanche	10940	9200	84%	19%	0.45	3	216.73

Disclaimer: Gauntlet reserves the right to not move forward with any parameter changes recommended in Snapshot polls, if market conditions change meaningfully.

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