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Title: [ARFC] Add MKR to Ethereum v3 Author: @Llamaxyz - DeFi_Consulting (@matthewgraham), ACI (@MarcZeller) and 3SE Dated: 2023-02-18

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Summary

This proposal presents Aave the opportunity to onboard MKR to the Ethereum v3 Liquidity Pool.

Abstract

MKR is the governance token of the Maker DAO ecosystem. MKR token holders govern the Maker Protocol, the smart contracts that power DAI. There is currently $12.71m of MKR deposited into Aave v2 on Ethereum. This proposal grants Aave the opportunity to list the governance token of the community supporting DAI which contributes $167m of TVL on the Ethereum v2 deployment.

This ARFC is a joint effort with ACI and 3SE to allow a selection of v2 listed assets to be onboarded on V3 via the governance process. Subject to a favourable Snapshot vote, Llama will submit an AIP for voting.

Motivation

Maker DAO has over $7.45B in TVL and is ranked second on Defi Llama TVL rankings. The Maker Protocol is only deployed on the Ethereum network. The stable coin DAI, provides $167m of deposits into Aave v2 on Ethereum, with over $103m of this supply being borrowed by users.

The risk parameters provided here within are from Gauntlet’s original Aave v3 initial assets listings and configurations forum thread. These parameters are to be revised by Gauntlet and feedback will be incorporated before progressing to a Snapshot vote.

The interest rate provided in the proposal mirrors the v2 deployment with exception of the parameters specific to stable interest rates. The stable rates proposed are the somewhat generic listing rates as stable borrowing is disabled. However, if stable borrowing was enabled, the suggested parameters are suitable and don’t create any undesirable dynamics between stable and variable rates.

We note that this proposal is to be reviewed by Gauntlet, with feedback incorporated, prior to progressing to Snapshot.

Specification

Ticker: MKR

Contract Address: 0xba100000625a3754423978a60c9317c58a424e3D

Risk Parameter	Value
Isolation Mode	YES
Enable Borrow	YES
Enable Collateral	YES
Loan To Value	65.00%
Liquidation Threshold	70.00%
Liquidation Bonus	8.50%
Reserve Factor	20.00%
Liquidation Protocol Fee	10.00%
Borrow Cap	1,500
Supply Cap	6,000
Debt Ceiling	$2,500,000
Variable Base	0.00%
Variable Slope1	7.00%
Variable Slope2	300.00%
Uoptimal	45%
Stable Borrowing	Disabled
Stable Slope1	13.00%
Stable Slope2	300.00%
Base Stable Rate Offset	3.00%
Stable Rate Excess Offset	5.00%
Optimal Stable To Total Debt Ratio	20.00%

Note: Stable borrowing is disabled, however parameters are provided in case stable borrowing is enabled at a later date without amending any parameters.

Copyright

Copyright and related rights waived via CC0.