Apr 1, 2025
This is an archive of our post on Aave governance forum. Read the full thread here.
LlamaRisk - Monthly Community Update
March 2025
Overview
LlamaRisk presents our March 2025 monthly update, summarizing key activities and outlining upcoming priorities.
Highlights
Recommendations and inputs
Asset onboarding
[ARFC] Onboard scETH, scUSD, and scBTC to Aave V3 Sonic Instance - Supported onboarding scUSD and scETH while advising against scBTC due to low liquidity.
[ARFC] Add USR to Aave v3 Core Instance - Recommended onboarding, contingent on establishing a formal bug bounty program, which was recently implemented.
[ARFC] Add wstUSR to Aave v3 Core Instance - Recommended onboarding, contingent on establishing a formal bug bounty program, aligning with our stance on USR.
[ARFC] Add stS to Aave v3 Sonic Instance - Supported onboarding while highlighting an
OPERATOR_ROLEmisassignment to the deployer EOA, which was subsequently fixed by the team.[ARFC] Add AAVE token to Aave V3 Base Instance - Supported onboarding as collateral-only on Base with conservative parameters due to sufficient liquidity, distribution, and established presencee.
New chain
[ARFC] Deploy Aave v3 on Plasma - Engaging with Plasma’s team to address information gaps, as the network’s early stage makes issuing a recommendation not possible.
[ARFC] Deploy Aave v3 on megaETH - Provided preliminary support for deployment, with asset recommendations to follow as mainnet launch approaches.
[ARFC] Enhancements in Aave v3 Gnosis Chain Instance - Supported switching to USDC.e, recommending a 0 LTV for USDC and a 4M sDAI borrow cap to mitigate uncertainty in sDAI loan demand.
[ARFC] Deploy Aave on Soneium - Supported deployment while noting reliance on bridged USDC and USDT due to the absence of natively minted alternatives.
GHO related
[ARFC] Launch GHO on Gnosis Chain - Supported deployment while emphasizing GSMs’ role in fostering GHO growth and enabling sGHO roll-out.
[ARFC] GHO Gas Token Framework - Supported the proposal, recognizing its potential to enhance GHO adoption and utility.
[ARFC] Launch GHO on Sonic & set ACI as Emissions Manager for Rewards - Supported the proposed GHO risk parameters, including CCIP integration and
GhoDirectMinterconfigurations.[TEMP CHECK] GHO Aave Savings Upgrade - Recognized the potential benefits of the implementation while highlighting the risk of USDC yield dilution due to increased sGHO supply via stataGSMs.
E-modes
[ARFC] wstETH and weETH E-Modes and LT/LTV Adjustments on Ethereum, Arbitrum, Base - 03.12.25 - Supported the proposed parameter changes while noting the low likelihood of LST slashing triggering liquidations at high LTVs.
[ARFC] rsETH LTV & LT Update - Supported the parameter changes while analyzing edge case scenarios, including potential ETHx slashing risks.
[ARFC] Add support for Wrapped Origin Sonic (wOS) to Aave v3 - Supported onboarding and recommended a wOS/s E-Mode to enhance capital efficiency.
[ARFC] Enable eBTC/WBTC liquid E-Mode on Aave v3 Core Instance - Recommended using CAPO with Chainlink’s BTC/USD feed for LBTC pricing and suggested a higher supply cap based on improved liquidity.
Legal Commentary
[Temp Check] Building Horizon’s RWA Product: An Aave Licensed Instance for Institutions - Expressed interest in collaborating with Aave Labs on an RWA-integrated structure, referencing case studies of similar setups in crypto protocols.
[ARFC] Add bCSPX to Aave V3 Gnosis Instance - Addressed a delegate’s inquiry by providing regulatory clarification on bCSPX listing.
[ARFC] Aavenomics implementation: Part one - Supported the proposal and provided key insights on the potential legal ramifications of this update.
Misc.
[ARFC] Aave Umbrella - activation - Commended the update and shared ongoing work on our Umbrella capitalization methodology.
[ARFC] Aave <> Chainlink SVR v1. Phase 1 activation - Supported the proposal while highlighting synchronization challenges and recommending a phased roll-out to mitigate risks.
[ARFC] Stablecoin Interest Rate Curve Update - 03.04.2025 - Supported the proposed adjustments and analyzed their implications on stablecoin borrowing dynamics.
[ARFC] Adjust Risk Parameters for Aave V2 and V3 on Polygon - Supported the changes while recommending a preference for non-rehypothecated assets within Aave’s Polygon market.
[ARFC] BGD. Aave ClinicSteward - Supported the elimination of legacy bad debt via the Aave Collector, which we flagged earlier.
[ARFC] Orbit Program Renewal - Q1 2025 - Supported the Orbit program, emphasizing the importance of a strong delegate ecosystem for Aave DAO.
[ARFC] Onboard Pendle PT tokens to Aave V3 Core Instance: Supported BGD Labs’ dynamic linear discount oracle for Pendle PTs as a balanced pricing solution with appropriate governance controls.
Research and analysis
LlamaRisk Insights: sGHO Legal Implications - Analyzed key regulatory considerations for stablecoins in the EU, Singapore, and Dubai, assessing their implications on sGHO.
Collateral Risk Assessment - pufETH - Published a collateral risk assessment, analyzing system architecture, dependency management, smart contract security, oracle integration, market risk, and access control.
Community Engagement
Newsletter: This Week in Aave - Continued delivering weekly roundups of Aave governance updates while enhancing content with deeper insights for stakeholders and users.
Upcoming Focus Areas
Operation Spring Cleaning - Launch is just around the corner, with a dashboard for asset scoring based on access control, security, legal, dependency, and transparency metrics for DeFi protocols.
In the process of peer reviewing and backtesting our methodology for Umbrella liquidity targets.
Monitoring Chainlink SVR V1 (Smart Value Recapture oracles) while providing support and analysis for further parameterization and roll-out.
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.