> For the complete documentation index, see [llms.txt](https://contributions.ryanholloway.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://contributions.ryanholloway.xyz/rabbithole/rh-metagov/voting-recs/aave-avalanche-market-avax-risk-parameters-update.md).

# 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:**&#x20;

<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