Simple Summary

Gauntlet proposes adjusting interest rate parameters for the Ethereum, Polygon, Avalanche, Arbitrum, and Optimism Aave V3 markets. Tokens impacted include USDC, USDT, EURS, WBTC, DPI, and CRV. If these changes are approved, our models indicate that it could lead to over $135k in annualized protocol revenue growth. Forum post can be found here.

Abstract

Given the significant shifts in crypto markets, Gauntlet’s platform has evaluated all assets on Aave V3’s active markets and has identified opportunities to adjust parameters for certain assets for the benefit of the protocol. Our methodology makes data-informed decisions around setting borrower and supplier interest rates when market conditions require the protocol to reduce risk or when strategic opportunities present themselves to increase protocol revenue without materially impacting risk. This analysis further finetunes the interest rate curves of Aave V3 across the Ethereum, Polygon, Avalanche, Arbitrum, and Optimism markets.

Objectives

Among other factors, there are two primary reasons to adjust an interest rate curve:

1. mitigate the risk of 100% utilization in a pool
2. build reserves via protocol revenue to cover insolvencies or other expenses in the future

As a secondary objective, we want to optimize the user experience of Aave’s borrowers and suppliers.

Specification

Disclaimer: Gauntlet reserves the right to not move forward with any of these parameter changes, if market conditions change meaningfully.

By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos.