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Chaos Labs LT Reduction Aave V2 Ethereum
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@yonikesel
yonikesel committed Oct 30, 2023
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207 changes: 207 additions & 0 deletions ...tion_20231030_before_AaveV2Ethereum_AaveV2EthereumLTReduction_20231030_after.md
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## Reserve changes

### Reserve altered

#### MANA ([0x0F5D2fB29fb7d3CFeE444a200298f468908cC942](https://etherscan.io/address/0x0F5D2fB29fb7d3CFeE444a200298f468908cC942))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 48 % | 37 % |


#### YFI ([0x0bc529c00C6401aEF6D220BE8C6Ea1667F6Ad93e](https://etherscan.io/address/0x0bc529c00C6401aEF6D220BE8C6Ea1667F6Ad93e))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 45 % | 43 % |


#### 1INCH ([0x111111111117dC0aa78b770fA6A738034120C302](https://etherscan.io/address/0x111111111117dC0aa78b770fA6A738034120C302))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 24 % | 1 % |


#### DPI ([0x1494CA1F11D487c2bBe4543E90080AeBa4BA3C2b](https://etherscan.io/address/0x1494CA1F11D487c2bBe4543E90080AeBa4BA3C2b))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 16 % | 14 % |


#### UNI ([0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984](https://etherscan.io/address/0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 70 % | 64 % |


#### REN ([0x408e41876cCCDC0F92210600ef50372656052a38](https://etherscan.io/address/0x408e41876cCCDC0F92210600ef50372656052a38))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 27 % | 25 % |


#### CVX ([0x4e3FBD56CD56c3e72c1403e103b45Db9da5B9D2B](https://etherscan.io/address/0x4e3FBD56CD56c3e72c1403e103b45Db9da5B9D2B))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 33 % | 30 % |


#### LINK ([0x514910771AF9Ca656af840dff83E8264EcF986CA](https://etherscan.io/address/0x514910771AF9Ca656af840dff83E8264EcF986CA))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 82 % | 81 % |


#### xSUSHI ([0x8798249c2E607446EfB7Ad49eC89dD1865Ff4272](https://etherscan.io/address/0x8798249c2E607446EfB7Ad49eC89dD1865Ff4272))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 28 % | 1 % |


#### MKR ([0x9f8F72aA9304c8B593d555F12eF6589cC3A579A2](https://etherscan.io/address/0x9f8F72aA9304c8B593d555F12eF6589cC3A579A2))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 35 % | 30 % |


#### SNX ([0xC011a73ee8576Fb46F5E1c5751cA3B9Fe0af2a6F](https://etherscan.io/address/0xC011a73ee8576Fb46F5E1c5751cA3B9Fe0af2a6F))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 43 % | 41 % |


#### ENS ([0xC18360217D8F7Ab5e7c516566761Ea12Ce7F9D72](https://etherscan.io/address/0xC18360217D8F7Ab5e7c516566761Ea12Ce7F9D72))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 50 % | 47 % |


#### CRV ([0xD533a949740bb3306d119CC777fa900bA034cd52](https://etherscan.io/address/0xD533a949740bb3306d119CC777fa900bA034cd52))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 42 % | 38 % |


#### ZRX ([0xE41d2489571d322189246DaFA5ebDe1F4699F498](https://etherscan.io/address/0xE41d2489571d322189246DaFA5ebDe1F4699F498))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 37 % | 34 % |


#### BAL ([0xba100000625a3754423978a60c9317c58a424e3D](https://etherscan.io/address/0xba100000625a3754423978a60c9317c58a424e3D))

| description | value before | value after |
| --- | --- | --- |
| liquidationThreshold | 25 % | 21 % |


## Raw diff

```json
{
"reserves": {
"0x0F5D2fB29fb7d3CFeE444a200298f468908cC942": {
"liquidationThreshold": {
"from": 4800,
"to": 3700
}
},
"0x0bc529c00C6401aEF6D220BE8C6Ea1667F6Ad93e": {
"liquidationThreshold": {
"from": 4500,
"to": 4300
}
},
"0x111111111117dC0aa78b770fA6A738034120C302": {
"liquidationThreshold": {
"from": 2400,
"to": 100
}
},
"0x1494CA1F11D487c2bBe4543E90080AeBa4BA3C2b": {
"liquidationThreshold": {
"from": 1600,
"to": 1400
}
},
"0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984": {
"liquidationThreshold": {
"from": 7000,
"to": 6400
}
},
"0x408e41876cCCDC0F92210600ef50372656052a38": {
"liquidationThreshold": {
"from": 2700,
"to": 2500
}
},
"0x4e3FBD56CD56c3e72c1403e103b45Db9da5B9D2B": {
"liquidationThreshold": {
"from": 3300,
"to": 3000
}
},
"0x514910771AF9Ca656af840dff83E8264EcF986CA": {
"liquidationThreshold": {
"from": 8200,
"to": 8100
}
},
"0x8798249c2E607446EfB7Ad49eC89dD1865Ff4272": {
"liquidationThreshold": {
"from": 2800,
"to": 100
}
},
"0x9f8F72aA9304c8B593d555F12eF6589cC3A579A2": {
"liquidationThreshold": {
"from": 3500,
"to": 3000
}
},
"0xC011a73ee8576Fb46F5E1c5751cA3B9Fe0af2a6F": {
"liquidationThreshold": {
"from": 4300,
"to": 4100
}
},
"0xC18360217D8F7Ab5e7c516566761Ea12Ce7F9D72": {
"liquidationThreshold": {
"from": 5000,
"to": 4700
}
},
"0xD533a949740bb3306d119CC777fa900bA034cd52": {
"liquidationThreshold": {
"from": 4200,
"to": 3800
}
},
"0xE41d2489571d322189246DaFA5ebDe1F4699F498": {
"liquidationThreshold": {
"from": 3700,
"to": 3400
}
},
"0xba100000625a3754423978a60c9317c58a424e3D": {
"liquidationThreshold": {
"from": 2500,
"to": 2100
}
}
}
}
```
80 changes: 80 additions & 0 deletions src/20231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2EthereumLTReduction.md
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---
title: "Aave V2 Ethereum LT Reduction"
author: "Chaos Labs - @yonikesel"
discussions: "https://governance.aave.com/t/arfc-v2-ethereum-lt-reductions-10-27-2023/15249"
---

## Simple Summary

A proposal to reduce Liquidation Threshold (LT) on Aave V2 Ethereum.

## Motivation

In accordance with the [v2 deprecation framework](https://governance.aave.com/t/arfc-aave-v2-markets-deprecation-plan/14870), Chaos Labs and Gauntlet advise implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum

## LT Reductions

The recommendations below suggest an LT configuration that optimizes reductions without significantly increasing the number of accounts eligible for liquidation. The proposed values are set at a margin of at least ~4% from the closest LT figure, which would trigger more substantial liquidations.

This will affect 20 accounts, leading to a cumulative liquidation of $1,101 in collateral value.

| Asset | Current LT | Rec LT | Value Liquidated ($) | Accounts Liquidated |
| ------ | ---------- | ------ | -------------------- | ------------------- |
| 1INCH | 24% | 1% | 163 | 1 |
| BAL | 25% | 21% | 43 | 2 |
| BAT | 1% | 1% | 0 | 0 |
| CRV | 42% | 38% | 10 | 1 |
| CVX | 33% | 30% | 0 | 0 |
| DPI | 16% | 14% | 36 | 1 |
| ENJ | 50% | 50% | 0 | 0 |
| ENS | 50% | 47% | 2 | 1 |
| MANA | 48% | 37% | 28 | 1 |
| MKR | 35% | 30% | 149 | 1 |
| REN | 27% | 25% | 57 | 1 |
| SNX | 43% | 41% | 28 | 1 |
| UNI | 70% | 64% | 0 | 0 |
| xSUSHI | 28% | 1% | 270 | 9 |
| YFI | 45% | 43% | 0 | 0 |
| ZRX | 37% | 34% | 315 | 1 |
| LINK | 82% | 81% | 0 | 0 |

_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. Chaos Labs will publicly communicate the planned amendments and list of affected accounts leading to the on-chain execution._

## Specification

Frozen Assets:

| Asset | Current LT | Rec LT |
| ------ | ---------- | ------ |
| 1INCH | 24% | 1% |
| BAL | 25% | 21% |
| BAT | 1% | 1% |
| CRV | 42% | 38% |
| CVX | 33% | 30% |
| DPI | 16% | 14% |
| ENJ | 50% | 50% |
| ENS | 50% | 47% |
| MANA | 48% | 37% |
| MKR | 35% | 30% |
| REN | 27% | 25% |
| SNX | 43% | 41% |
| UNI | 70% | 64% |
| xSUSHI | 28% | 1% |
| YFI | 45% | 43% |
| ZRX | 37% | 34% |
| LINK | 82% | 81% |

## References

- Implementation: [AaveV2Ethereum](https://github.com/bgd-labs/aave-proposals-v3/blob/main/src/20231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2Ethereum_AaveV2EthereumLTReduction_20231030.sol)
- Tests: [AaveV2Ethereum](https://github.com/bgd-labs/aave-proposals-v3/blob/main/src/20231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2Ethereum_AaveV2EthereumLTReduction_20231030.t.sol)
- [Snapshot](Direct to AIP)
- [Discussion](https://governance.aave.com/t/arfc-v2-ethereum-lt-reductions-10-27-2023/15249)

# Disclaimer

Chaos Labs and Gauntlet have not been compensated by any third party for publishing this ARFC.

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).
51 changes: 51 additions & 0 deletions ...0231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2EthereumLTReduction_20231030.s.sol
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// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

import {GovV3Helpers, IPayloadsControllerCore, PayloadsControllerUtils} from 'aave-helpers/GovV3Helpers.sol';
import {EthereumScript} from 'aave-helpers/ScriptUtils.sol';
import {AaveV2Ethereum_AaveV2EthereumLTReduction_20231030} from './AaveV2Ethereum_AaveV2EthereumLTReduction_20231030.sol';

/**
* @dev Deploy Ethereum
* command: make deploy-ledger contract=src/20231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2EthereumLTReduction_20231030.s.sol:DeployEthereum chain=mainnet
*/
contract DeployEthereum is EthereumScript {
function run() external broadcast {
// deploy payloads
AaveV2Ethereum_AaveV2EthereumLTReduction_20231030 payload0 = new AaveV2Ethereum_AaveV2EthereumLTReduction_20231030();

// compose action
IPayloadsControllerCore.ExecutionAction[]
memory actions = new IPayloadsControllerCore.ExecutionAction[](1);
actions[0] = GovV3Helpers.buildAction(address(payload0));

// register action at payloadsController
GovV3Helpers.createPayload(actions);
}
}

/**
* @dev Create Proposal
* command: make deploy-ledger contract=src/20231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2EthereumLTReduction_20231030.s.sol:CreateProposal chain=mainnet
*/
contract CreateProposal is EthereumScript {
function run() external broadcast {
// create payloads
PayloadsControllerUtils.Payload[] memory payloads = new PayloadsControllerUtils.Payload[](1);

// compose actions for validation
IPayloadsControllerCore.ExecutionAction[]
memory actionsEthereum = new IPayloadsControllerCore.ExecutionAction[](1);
actionsEthereum[0] = GovV3Helpers.buildAction(address(0));
payloads[0] = GovV3Helpers.buildMainnetPayload(vm, actionsEthereum);

// create proposal
GovV3Helpers.createProposal2_5(
payloads,
GovV3Helpers.ipfsHashFile(
vm,
'src/20231030_AaveV2Ethereum_AaveV2EthereumLTReduction/AaveV2EthereumLTReduction.md'
)
);
}
}
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