An SVG of an eye

Proposal overview

Risk Parameter Updates for MKR - Aave V2 Ethereum

Executed

Executed on 

Mar 12, 2023

Simple Summary

A proposal to adjust two (2) total risk parameters, including Liquidation Threshold (LT) and Loan-To-Value (LTV), for one (1) asset on Aave V2 Ethereum.

Motivation

This proposal is a continuation of a series of proposals (AIP-136, AIP-137) intended to reduce the viability of different attack vectors on V2 assets.

At Chaos Labs, we continuously monitor markets and utilize our Asset Protection Tool to assess potential attack vectors on the protocol and suggest parameter and configuration updates accordingly (Supply/Borrow Caps, Liquidation Threshold updates, freezing of assets, listing in isolation mode, etc.)

Capital efficiency reductions on V2 assets will further mitigate attack vectors by increasing the capital required to wage a price manipulation attack on Aave. In addition, these changes will act as an effective motivation to shift usage to V3, where users can enjoy the benefits of enhanced risk mitigation mechanisms.

As Liquidation Threshold reductions may lead to user accounts being eligible for liquidations upon their approval, we want to clarify the full implications to the community at each step. To minimize this impact, we suggest reaching the desired settings by a series of incremental decreases, following the Risk-Off Framework previously approved by the community, with a reduction of up to 3% in any given AIP.

To avoid liquidations, Chaos Labs will communicate the planned amendments before their on-chain execution via all available avenues (Twitter, forums, Nansen Connect, and Blockscan Chat).

Below, we share data to quantify the effect of the recommended reductions on protocol users.

At the time of this proposal, none of the current positions will be eligible for liquidation due to the proposed change.

$MKR Zero (0) accounts are eligible for liquidation.

Specification

The following risk parameter proposal is presented below:

AssetParameterCurrentRecommendedChange
MKRLiquidation Threshold67%64%-3%
MKRLoan-to-Value62%59%-3%

References

Forum Post

Tests

Proposal payload implementation

Deployed proposal payload

Copyright

Copyright and related rights waived via CC0.

Your voting info

Voting results

YAE

436,878

AAVE

100.00%

NAY

0

AAVE

0%

Votes

State
Executed

Executed on 

Mar 12, 2023
Quorum
Reached
Current votes

Required

436.87K

320.00K

Differential
Reached
Current differential

Required

436.87K

80,000.00

Total voting power

16,000,000

Proposal details

Created

Block

7 Mar 2023, 16:52 UTC +00:00

16777727

Started

Block

8 Mar 2023, 17:09 UTC +00:00

16784927

Ended

Block

11 Mar 2023, 09:09 UTC +00:00

16804127

Executed

12 Mar 2023, 10:07 UTC +00:00

Author

Chaos Labs (@ori-chaoslabs, @yhayun)

We may employ on-the-spot tracking techniques during your browsing session to collect data on your interactions, preferences, and behaviour. This data helps us personalise your experience and improve our services. See our Privacy Policy.