Aave Weekly Update - May 29, 2023

Weekly Update - May 29, 2023

Welcome to the Aave Weekly Update, your guide to what's happening in Aave governance. Click the button below to manage which weekly updates you receive by email.

⌛ Key Points

The eight values articulated in the delegate code of conduct were ratified and the framework for recognized delegates was approved on Snapshot.

The Caps Plus Risk Steward proposal has been executed, which means that the RISK_COUNCIL (a Gnosis Safe controlled by Gauntlet and Chaos Labs) can perform cap increases under specific conditions — reducing governance overhead.

Also note the e-mode changes across chains in AIP 233 below.

🗳️ Recent Proposals

Aave Improvement Proposals

DeFi Saver Aave V3 FlashBorrowers Whitelist Part II (235)
- Summary: This proposal suggests that Aave governance consider whitelisting DeFi Saver as a part of the FlashBorrowers program in Aave V3 on the Optimism liquidity pool. DeFi Saver has a history of collaboration with the Aave Protocol, and waiving flashloan fees for DeFi Saver is expected to make certain strategies more convenient and profitable, potentially leading to increased borrow volume and revenue for the Aave DAO.
- Proposer: Marc Zeller / Aave Chan Initiative
- Status: Executed on May 29
Caps Plus Risk Steward (234)
- Summary: This proposal suggests granting the RISK_ADMIN role to the CapsPlusRiskStewards smart contract on each network where Aave v3 is active. Once granted, the RISK_COUNCIL, a Gnosis Safe controlled by risk-providers Gauntlet and Chaos Labs, can adjust asset borrow/supply caps upwards without requiring a voting process. The proposal aims to automate and simplify the cap adjustment process, which is typically supported by the community without any major objections, reducing voting overhead and execution time.
- Proposer: BGD Labs
- Status: Executed on May 28
Aave Stablecoin E-mode changes for V3 Avalanche, Optimism, Polygon, and Arbitrum (233)
- Summary: This proposal suggests making changes to stablecoin E-mode parameters in order to optimize risk/reward tradeoffs on Aave V3. The proposed changes include lowering the stablecoin E-mode liquidation threshold (LT) from 97.5% to 95% and the loan-to-value (LTV) ratio from 97% to 93% across multiple chains, including Avalanche, Optimism, Polygon, and Arbitrum.
- Proposer: Gauntlet
- Status: Executed on May 27
Activate Emode for rETH Aave Ethereum V3 (232)
- Summary: This proposal suggests activating emode for rETH on the Ethereum v3 Liquidity Pool. The motivation behind this is to enable leveraged strategies using rETH as collateral, allowing users to "long" rETH on secondary markets and increase staking yield through loop strategies.
- Proposer: Marc Zeller / Aave Chan Initiative
- Status: Executed on May 27
wMATIC Supply & Borrow Cap Increase Polygon v3 (231)
- Summary: This proposal aims to increase the wMATIC Supply and Borrow Caps on Polygon v3 due to strong deposit flows and the growth of yield maximizing strategies. The increased caps will support the migration of Balancer liquidity providers and users from Aave v2 to v3, accommodate the demand for borrowing wMATIC, and enable the continued growth of yield maximizing strategies.
- Proposer: Llama
- Status: Executed on May 24
Fix rate strategies issue on Aave v2 Polygon (230)
- Summary: This proposal addresses an issue caused by a previous proposal (224) on Aave v2 Polygon. Proposal 224 updated the interest rate strategies for certain assets, but it lacked compatibility with Aave v2 Polygon, resulting in certain user actions not being performed. This new proposal aims to fix this problem by connecting new rate strategy contracts with the correct interface for Aave v2 Polygon.
- Proposer: BGD Labs
- Status: Executed on May 24

On Snapshot

[TEMP CHECK] Safety Module Upgrade Part III - Enable gauges on BPT in Safety Module (smBPT). Voting ends on June 1.
[TEMP CHECK] Safety Module Upgrade Part II - Asset Diversity, SM Categories & Slashing Updates. Voting ends on June 1.
[ARFC] Optimism Create ETH E-Mode. Voting ends on June 1.
[ARFC] Optimism v3 Supply Cap Update. Voting ends on June 1.
[ARFC] Polygon Supply Cap Update 23.05.2023. Voting ends on June 1.
[ARFC] - Chaos Labs Risk Parameter Updates - Aave V3 Ethereum - 2023.05.18. Ended on May 28 with nearly 100% voting YAE.
[ARC] Delegate Code of Conduct. All eight values ratified on May 25.
[ARC] Framework for Recognized Delegates. Ended on May 25 with nearly 100% voting YAE.

In discussion

[ARFC] Add fUSDC to Ethereum v3
[ARFC] Add RPL to Ethereum v3
[ARFC] Add ARB to Arbitrum Aave v3
[ARFC] Add FRAX Arbitrum Aave v3
[ARC] Add GMX toArbitrum v3
[ARC] Harmony Recovery
[TEMP CHECK] Aave V3 Deployment on Base
[TEMP CHECK] Safety Module Upgrade Part IV - Incentives Management Upgrade

✍️ Forum Highlights

Gauntlet recommends Synchronicity Price Adapter “killswitch” functionality for LST emode. Although very rare, "extreme variance" between the LST market price and LST smart contract price can compromise the Chainlink Synchronicity Price Adapter 2.0, potentially leading bad agents to take "advantage of extreme market conditions to create insolvencies on Aave."
Kentrell, a research analyst at Messari, kicked off a discussion about certain Aave markets that are "constrained" by supply and borrow caps -- and suggests strategies "to balance the concentration of depositors within these markets."
BGD Labs presents an "operational update of different oracle aspects, for the sake of consistency across instances of Aave." After expressions of support in the forum BGD Labs will publish AIP 236 to execute the plan.
Check out delegate platform updates from @lbsblockchain and @HKUST_EPI_BLOCKCHAIN.

📰 Stakeholder News

Llama, Aave DAO's treasury manager, has completed its financial report for April 2023. It notes a TVL of $7.9 billion, $130.7 million in treasury holdings, and a revenue of $4.7 million for the month of April.