👻Aave: Avalanche Market - AVAX Risk Parameters Update

Voting Recommendation by (Discord: Raho#0007)

Summary:

Initial risk parameters for new markets are set pretty conservatively, and this proposal is to update and ease the AVAX risk parameters on the Aave Avalanche Market: LTV and Liquidation Threshold.

About this proposal:

Index Coop has put this proposal forward to align with the Aave community’s moderate risk tolerance level. Index Coop’s analysis of AVAX C-chain’s transaction volume, market cap, avg. volume 1m, avg. volume 3m, and norm. volatility they have concluded the AVAX token’s risk score is a B-.

Their recommendations are to change the AVAX Loan to Value from 50% to 60%, and AVAX Liquidation Threshold from 65% to 70%.

This is a pretty straightforward proposal. Updating these risk parameters are consistent with other coin risk metrics.

(If anyone wants to read more about Avalanche, check out @raho’s previous write-up on ‘Upgrade Aave to V3 on Avalanche https://discord.com/channels/705527597425229885/936244678557315114/939279448291835975)

Recommendation:

I recommend that the Rabbithole Metagovernance Pod vote ‘Yes’ on the proposal, so Aave can make these risk parameter changes. This proposal aligns with the RH value of participation > speculation. Increased loan to value of 10% means that minnows will be able to borrow a greater percentage of their AVAX tokens’ value. Which means minnows receive a greater loan for their AVAX collateral. Potentially allowing them to use their bigger loan to participate in other protocols.

Proposal: https://snapshot.org/#/aave.eth/proposal/0x5b74b43509e00cf68c0a39c951271b5cd932a6d790654852424cec3df7520dee

Aave Community Discussion:

https://governance.aave.com/t/arc-avalanche-market-avax-risk-parameters-update/7128

Open Questions:

Feedback:

• Execution Status: Executed

• Vote: Yes

• Community vote

  • 25 Y

  • 0 N

• Pod vote

  • 19 Y

  • 0 N