Enable FEI as Collateral on Aave V2

Simple Summary

A proposal to enable FEI as a collateral asset on Aave V2.

Abstract

This proposal is a continuation of Gauntlet's Dynamic Risk Parameters engagement which includes enabling assets as collateral on Aave V2.

Specification

Gauntlet's simulation analysis shows that it is safe to enable FEI as a collateral asset on Aave V2 with the below risk parameters. The initial parameters for FEI will be an LTV of 50%, a Liquidation Threshold of 60%, and a Liquidation Bonus of 6.5%. Most of the stablecoins that can be used as collateral on Aave are more liquid, and our platform’s analysis conservatively recommends initially capping the amount of collateral that can be liquidatable to the average daily trading volume of FEI. If user behavior and market conditions over the coming months continue to show safe conditions for increasing capital efficiency on FEI, we shall recommend ramping up the LTV and Liquidation Threshold incrementally.

Implementation

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

Forum Discussion.

Copyright

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