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Proposal overview

Risk Parameter Updates 2021-10-21

Executed

Executed on 

Oct 29, 2021

Simple Summary

A proposal to adjust four (4) total risk parameters across three (3) Aave V2 assets including LTV, Liquidation Threshold, and Liquidation Bonus.

Abstract

This proposal is a batch update of three risk parameters to align with the the Moderate risk level chosen by the Aave community. These paramater updates are a continuation of Gauntlet's regular parameter recommendations, the latest being AIP-42: Risk Parameter Updates 2021-10-14.

Motivation

This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets. For more detail on Gauntlet's first two months of recommendations and their impact, please see our Monthly Risk Report.

Specification

No significant changes in volatility or liquidity were observed in most assets. However, we would note that the collateral usage of ZRX on Aave almost doubled, so that is an asset that we are monitoring during the upcoming period.

ParameterCurrent ValueRecommended Value
ENJ Liquidation Threshold65%70%
DPI Loan To Value55%65%
DPI Liquidation Bonus10.0%8.5%
ZRX Loan To Value65%60%

See below volatility and exchange volume data from 10/14 to 10/21 that were important drivers for the updated parameter recommendations.

Symbol10-21 Volatility10-14 VolatilityVolatility ChangeWeekly Average Daily Volume Change (%)
DPI0.9246618021.07082198-0.14616017896.2012726
ENJ1.0991623751.165823176-0.51838180340.9981913
ZRX1.0675260261.230865683-0.163339657-34.0377076

Risk Dashboard

The community should use Gauntlet's Risk Dashboard to better understand the updated parameter suggestions and general market risk in Aave V2.

Implementation

The proposal sets the LTV and liquidation threshold ratios by calling configureReserveAsCollateral on the LendingPoolConfigurator contract at 0x311Bb771e4F8952E6Da169b425E7e92d6Ac45756, using the address and parameters specific to each token.

The full list of parameter updates can be found in the forum.

Copyright

Copyright and related rights waived via CC0.

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Executed on 

Oct 29, 2021
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Proposal details

Created

Block

25 Oct 2021, 23:14 UTC +00:00

13489472

Started

Block

25 Oct 2021, 23:14 UTC +00:00

13489472

Ended

Block

28 Oct 2021, 23:14 UTC +00:00

13508672

Executed

29 Oct 2021, 23:48 UTC +00:00

Author

Nick Cannon, Watson Fu, Paul Lei