Aave is reducing DAI loan-to-value (LTV) ratio by 12 share factors after MakerDAO added Ethena’s USDe artificial greenback as collateral.
Aave, the most important lending protocol in decentralized finance (DeFi), is lowering the quantity of MakerDAO’s DAI stablecoin allowed as collateral on issues Maker has turn out to be extra dangerous after it added Ethena’s USDe as backing for DAI.
Aave is reducing the loan-to-value (LTV) ratio of DAI and sDAI by 12 share factors, bringing it all the way down to 63%, in line with a publish on the protocol’s governance discussion board.
The choice comes after Marc Zeller, founding father of the Aave Chan Initiative, proposed to utterly take away DAI as collateral on Aave after MakerDAO authorised an govt proposal, which let buyers borrow $100 million of DAI in opposition to USDe and sUSDe (staked USDe), by way of one other lending protocol, Morpho.
“LTV goes down a bit however a lot increased than zero, DAI stays in Aave, we transfer on. Onwards,” Zeller mentioned on X.
The choice comes following an in depth evaluation carried out by Chaos Labs, which mentioned that Ethena’s mannequin “introduces unprecedented quantitative concerns within the DeFi area.”
That, coupled with “the minimal income DAI collateral brings to Aave,” signifies that “Aave might resolve to scale back publicity to DAI as collateral,” Chaos Labs mentioned.
Aave governance determined to observe Chaos Labs’s “Conservative” advice somewhat than its “Aggressive” one, which might have lowered DAI’s LTV to 0%.
