Risk Parameter Updates for Aave V2 assets

Simple Summary

A proposal to adjust thirteen (13) total risk parameters across nine (9) Aave V2 assets including LTV, Liquidation Threshold, and Liquidation Bonus.

Abstract

This proposal is a batch update of three risk parameters based on previously selected community risk level preferences. First, a continuation of the two previous liquidation bonus updates, AIP-34: Liquidation Bonus Updates and AIP-38: Liquidation Bonus Updates for Eleven Aave V2 Assets. Second, updated LTV and Liquidation Threshold parameters to realign with the Moderate risk level chosen by the community.

Motivation

This set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets. While increased volatility affected most assets in the ecosystem, some tail assets experienced even higher volatility and larger collateral usage (supply that is significantly borrowed against). In addition, increased liquidity and decreased trading slippage for certain assets allow for lower liquidation bonuses.

Specification

See below volatility and collateral usage changes from 9/14 to 9/28 that were important drivers for the updated parameter recommendations.

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

Copyright

Copyright and related rights waived via CC0.