{"aip":55,"title":"Enable FEI as Collateral on Aave V2","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-2022-01-14/6942","created":"2022-01-18T00:00:00.000Z","preview":"## Simple Summary\n\nA proposal to enable FEI as a collateral asset on Aave V2 …","basename":"AIP-55","description":"## Simple Summary\n\nA proposal to enable FEI as a collateral asset on Aave V2.\n\n\n## Abstract\nThis proposal is a continuation of Gauntlet's Dynamic Risk Parameters engagement which includes enabling assets as collateral on Aave V2.\n\n\n## Specification\n\nGauntlet's simulation analysis shows that it is safe to enable FEI as a collateral asset on Aave V2 with the below risk parameters. The initial parameters for FEI will be an LTV of 50%, a Liquidation Threshold of 60%, and a Liquidation Bonus of 6.5%. Most of the stablecoins that can be used as collateral on Aave are more liquid, and our platform’s analysis conservatively recommends initially capping the amount of collateral that can be liquidatable to the average daily trading volume of FEI. If user behavior and market conditions over the coming months continue to show safe conditions for increasing capital efficiency on FEI, we shall recommend ramping up the LTV and Liquidation Threshold incrementally.\n\n\n![](https://i.imgur.com/ZmvleUX.png)\n\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\n[Forum Discussion](https://governance.aave.com/t/arc-risk-parameter-updates-2022-01-14/6942).\n\n## Copyright\n\nCopyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).\n"}