Summary
The Seamless Community (shoutout to Sean from YieldSchool) has noted that Seamless parameters for the AERO market are conservative as compared to other Base DeFi platforms. As such, the Seamless community is requesting a re-review and refresh of key AERO parameters, specifically LTV and LT
3 Likes
Summary
A proposal to increase AERO’s liquidation threshold and LTV on Seamless.
Motivation
AERO’s LTV and LT are currently set to 30% and 40%, respectively. These are relatively conservative parameters that have allowed us to observe how users behave. Following these observations, it is prudent for Seamless to increase these values to improve the asset’s borrowing power.
Of the current top 10 suppliers, just one has a borrow position, borrowing $46.5K USDC against AERO, WETH, and cbETH; they are not using AERO as collateral.
Overall, just $4.9K USDC and $400 DAI are being borrowed against AERO, indicating both that the market is very low risk and that parameters should be increased to make the market more competitive.
Crucially, we have observed that AERO’s liquidity against USDC has remained stable since September, with a median of just under 10M AERO able to be swapped for USDC at 10% price slippage.
This liquidity profile indicates that the asset can safely be used as collateral without raising concerns about bad debt caused by insufficient liquidity.
Finally, this market also has a debt ceiling of $2M, limiting the assets that can be borrowed and modulating the leverage in the market. Relative to the asset’s supply cap of $20M (at current price levels), this debt ceiling provides sufficient protection against the market becoming too highly leveraged. Should the debt ceiling reach full utilization, we will consider recommending raising it.
Specification
| Asset | Current LTV | Recommended LTV | Current LT | Recommended LT |
|---|---|---|---|---|
| AERO | 30% | 67.5% | 40% | 72.5% |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.
Copyright
Copyright and related rights waived via CC0
3 Likes
Since we have a positive risk analysis by chaos labs I tend to support the proposal
1 Like
I support making these risk parameter adjustments and even fast tracking them to a vote onchain
This would make the AERO market more competitive to other lending protocols with more favorable LT. Fully support thanks for the analysis to help here @chaoslabs
Given the recommendation is still more conservative than other Base platforms, I also support a fast track on this proposal
I agree with the points above. This recommendation of the AERO market looks solid, and I also believe we should fast track this proposal. Adjusting these parameters would be beneficial to the AERO market.
I agree with everything on this proposal. Let’s go!
AERO lets do this thing! Think this is great, keeps Seamless competitive on AERO markets and good timing/exposure to lean into with the POL strategy from Seamless on Aerodrome as of late
I support fast tracking this proposal.
Aero is a fluid place. I think that going to Aero was a good idea and rolling out there is a good way to increase utility, expand Seamless’s presence and ideally grow Seamless overall with exposure to Base users that might be Aero supporters now learning about Seamless.
While the original parameters were well researched and rightfully conservative, the data coming back is valuable and should not only be respected but implemented quickly as Aero changes very rapidly. Thats why im in favor of fast tracking the proposal.
Looks like the fast track quorum has been met, the thread will be updated with the onchain Tally link once the proposal is live.
Supporting the fast track as well
This proposal is live onchain, voting starts in 48 hours. Tally | Seamless Protocol | [SIP-34] Update AERO Risk Parameters
Look at AERO price!