{"aip":54,"title":"Risk Parameter Updates 2021-12-29","status":"Proposed","author":"Paul Lei, Jonathan Reem, Nick Cannon, Watson Fu","shortDescription":"Risk parameter updates","discussions":"https://governance.aave.com/t/arc-risk-parameter-updates-2021-12-29/6742","created":"2021-12-29T00:00:00.000Z","preview":"## Simple Summary\n\nA proposal to adjust nine (9) total risk parameters across seven …","basename":"AIP-54","description":"## Simple Summary\n\nA proposal to adjust nine (9) total risk parameters across seven (7) Aave V2 assets including LTV, Liquidation Threshold, and Liquidation Bonus.\n\n\n## Abstract\nThis proposal is a batch update of risk parameters to align with the the [Moderate risk level](https://snapshot.org/#/aave.eth/proposal/QmT9T4Rfnh1Z2HYmMPXvtFotMK2vSxiXK8dKStg2b6n4gi) chosen by the Aave community. These parameter updates are a continuation of Gauntlet's regular parameter recommendations.\n\n\n## Motivation\n\n\nThis set of parameter updates seeks to maintain the overall risk tolerance of the protocol while making risk trade-offs between specific assets.\n\n\n## Specification\n\nThis past week did not see outsized changes in market conditions nor within the Aave protocol. There were slight volatility drops and increases in trading volume and liquidity for most assets. Our platform recommends the following set of parameter changes that will decrease liquidation bonuses on several less-utilized assets.\n\n\n![](https://i.imgur.com/EaKE8FV.png)\n\n\n\n\n\n## Risk Dashboard\n\n\n\nThe community should use Gauntlet's [Risk Dashboard](https://gov.gauntlet.network/aave) to better understand the updated parameter suggestions and general market risk in Aave V2. \n\n\n\n![](https://i.imgur.com/q8uyBaE.png)\n\n\n## Implementation\n\nThe 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.\n\nThe full list of parameter updates can be found in the [forum](https://governance.aave.com/t/arc-risk-parameter-updates-2021-12-29/6742).\n\n## Copyright\n\nCopyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).\n"}