title: [ARFC] Prime Instance - Restore ETH LTV author: @TokenLogic created: 2024-02-04

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Summary

This publication proposes restoring ETH’s LTV to 82% on the Prime instance of Aave v3.

Motivation

With the introduction of liquidity mining rewards for ETH deposits on Prime, some users exploited wETH/wETH leverage to farm rewards. In response, ETH’s LTV was set to 0, preventing new ETH collateral positions while preserving existing ones.

Transitioning from direct liquidity mining emissions to a periodic Merkl distribution ensures that users leveraging wETH/wETH can be disqualified from rewards. By introducing qualification criteria, incentives are directed toward users who engage with the protocol as intended.

While details of the future liquidity mining program are yet to be announced, this proposal focuses on re-enabling ETH collateral positions by restoring the LTV to 82%—its original level at Prime’s launch.

Specification

The LTV for ETH on Prime is to be amended as outlined below:

Parameter	Current	Proposed
LTV	0.00%	82.00%

The ETH Correlated eMode category is to be amended as outlined below:

Parameter	Value	Value
Asset	wETH	wstETH
Collateral	Yes -> No	Yes
Borrowable	Yes	No
LTV	93.50%	93.50%
LT	95.50%	95.50%
Liquidation Penalty	1.00%	1.00%

Disclosure

TokenLogic does not receive any payment for this proposal.

Next Steps

1. Gather feedback from the community.
2. If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
3. If Snapshot outcome is YAE, escalate this proposal to the AIP stage.

Copyright

Copyright and related rights waived via CC0.