Aave

Authors: Gauntlet, Marc Zeller @marczeller - Aave-Chan Initiative

Date: 2023-07-13

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Summary

This proposal aims to initiate the offboarding process for TUSD from the Aave V2 Ethereum pool. The process will follow a similar process as the BUSD offboarding plan part I.

Gauntlet does not quantify risk associated with centralized stablecoins and regulatory concerns. In light of this, we provide this framework with ACI to the community to gauge preference and thoughts around further TUSD deprecation.

Motivation

TUSD has been a historic asset of the Aave ecosystem, but due to recent events, the ACI suggests consideration of its offboarding. The offboarding plan leverages the previous success of the BUSD offboarding plan and will incentive current users to slowly migrate their positions to other stablecoins on Aave.

Previous proposals have frozen TUSD and lowered TUSD LT to 77.5%. These proposals have reduced TUSD borrow and supply over the past 30 days, from 20M supplied and 18M borrowed, to 13.1M supplied and 6.8M borrowed today.

Specification

The following table outlines the proposed changes to the TUSD risk parameters:

Parameter	Current Value	Proposed Value
LTV	75%	0%
Liquidation Bonus	5%	10%
Reserve Factor	25%	95%
Borrowing Enabled	Yes	No
Stable Borrowing Enabled	Yes	No
Base Rate	0%	3%
Slope1	4%	7%
Slope2	100%	200%
UOptimal	80%	20%

Meanwhile, Gauntlet provides the following options to lower LT.

• This sets immediate bounds on the maximum debt that can be taken out with TUSD collateral, however it may force liquidate users.

Option 1: lower LT to 75%. 0 Forced liquidations, as of data on 2023.07.13.

Option 2: lower LT to 60%. Forced liquidations - total ~ $877k in supply, 4 accounts, as of data on 2023.07.13

Address	Health Factor	Health Factor with New Parameters	Total Borrows (USD)	Total Supply (USD)	Assets Borrowed	Assets Supplied
0x16af29b7efbf019ef30aae9023a5140c012374a5	1.05	0.82	644897.59	877486.0	[WETH]	[TUSD]
0xd4b954c7dbd77c2fadcd66ec681dd992e97a9374	1.05	0.81	80.69	109.0	[WETH]	[TUSD]
0xb56b29401afcc285d7b967a3164bfa58f94f70e7	1.10	0.85	73.04	103.0	[USDC]	[TUSD]
0x017b3763b8a034f8655d46345e3eb42555e39064	1.05	0.81	0.00	0.0	[SNX]	[TUSD]

Option 3: lower LT to 40%. Forced liquidations - total ~ $920k in supply, 7 accounts, as of data on 2023.07.13

Address	Health Factor	Health Factor with New Parameters	Total Borrows (USD)	Total Supply (USD)	Assets Borrowed	Assets Supplied
0x16af29b7efbf019ef30aae9023a5140c012374a5	1.05	0.54	644897.59	877486.0	[WETH]	[TUSD]
0xe66c21632e5fe9884b43c9b2573a61373a7264d9	1.02	0.98	27214.96	32409.0	[WETH, USDC, TUSD]	[AAVE, WETH, USDC, TUSD]
0xea40afcba852f3c9b4d47f91b5ca6924283498df	1.42	0.91	6401.85	11479.0	[USDC, DAI]	[WBTC, USDC, TUSD]
0xd4b954c7dbd77c2fadcd66ec681dd992e97a9374	1.05	0.54	80.69	109.0	[WETH]	[TUSD]
0xb56b29401afcc285d7b967a3164bfa58f94f70e7	1.10	0.57	73.04	103.0	[USDC]	[TUSD]
0x2648e99bc8ebf9164cff4b0432d0522618e65241	1.67	0.86	11.03	24.0	[DAI]	[TUSD]
0x017b3763b8a034f8655d46345e3eb42555e39064	1.05	0.54	0.00	0.0	[SNX]	[TUSD]

Disclaimer

This proposal is powered by Skyward. The Aave-Chan Initiative is not presenting this ARFC on behalf of any third party and is not compensated for creating this ARFC.

Next Steps

Welcome community feedback and initiate snapshot on 2023.07.24. If the Snapshot outcome is YAE, this proposal will be escalated to AIP stage.

Copyright

Copyright and related rights waived via CC0.