By using this site, you agree to our use of cookies, which we use to analyse our traffic in accordance with our Privacy Policy. We also share information about your use of our site with our analytics partners.

CryptoEconomic Research

DeFi Protocol Governance Report | April 2022 | Week 5

Risk parameter updates for Aave and Compound, Aave renews the Aave Grants DAO, and Maker whitelists Oracles!
by Laurence SmithApril 29, 2022
DeFi Protocol Governance Report
This image has an empty alt attribute; its file name is Compound-Banner.png

On-Chain Proposal: Risk Parameter Updates for MKR and AAVE

Created: April 25th, 2022

Passed: Yes,
257,074 COMP For,
0 Against

What does it do: The proposal makes the following parameter changes to two Compound assets:

  • Sets the cAAVE collateral factor to 70%
  • Sets the cMKR collateral factor to 70%

Why: This proposal is a batch update of risk parameters, in order to align with the Moderate risk level decided by the Compound community. They are part of a broader set of Gauntlet’s regular parameter reccommendations, with the proposal accounting for a tenth of the changes.  

Takeaway: The updates look to keep the overall risk tolerance of protocol by making risk trade-offs between assets. They are driven by an optimisation function that look at insolvencies, liquidations and borrow usage.   

This image has an empty alt attribute; its file name is aave-logo.png

Proposal: Aave Grants DAO Renewal Approval

Created: April 27, 2022

Passed: Yes,
210K AAVE For,
0 Against

What does it do: Renews the Aave Grants DAO program, adding $6 million to be split evenly over the next two quarters.

Why:  The Aave Grants DAO is a community-led grants program, which funds a range of ideas, projects and events that align with building out the Aave ecosystem of contributors. 

Takeaway: Aave are investing in building out their ecosystem – more ideas and innovations leads to more functionality and a better user experience, which should lead to more returns. Note that this is the third proposal for the Aave Grants DAO. 

Proposal: Should five (5) total risk parameters across four (4) Aave V2 assets be updated?

Created: April 22nd, 2022

Passed: Yes,
2.2k AAVE For,
194 Against

What does it do: The proposal looks to adjust the following five total risk parameters:

  • SNX Loan To Value from 45% to 49%
  • STETH Loan To Value from 70% to 73%
  • UNI Liquidation Bonus from 7.5% to 9.0%
  • UNI Liquidation Threshold from 70% to 75%
  • USDC Liquidation Threshold from 86% to 88%

Why: By updating the parameters Aave are looking to maintain the overall risk tolerance of the protocol. Risk parameters will continue to be adjusted to improve capital efficiency, whilst keeping risk at an acceptable level. 

Takeaway: Improved capital efficiency plays from Aave continue.  

This image has an empty alt attribute; its file name is MMI-NL-Banner-MakerDao.png

On-Chain Proposal: Oracle Whitelist Additions, Replacing the Curve stETH/ETH Oracle

Created: April 22nd, 2022

Passed: Yes,
92,226 MKR For,
0 Against

What does it do: The proposal makes the following changes to the Maker Protocol:

  • Whitelists Oasis.app on a range of oracles – you can view the full list here 
  • Replaces and reactivates the Curve stETH/ETH oracle, which is used for CRVV1ETHSTETH-A vaults

Why: The whitelisting of Oasis.app, a 3rd party application for accessing the Maker Protocol and other DeFi protocols, on a range of oracles is to enable the launch of a set of new automation features, that will allow for better management and protection of Maker Vaults going forward. In order for these automation features to be trustless and verifiable on-chain Oasis.app needs access to the given Oracles. 

Takeaway: Improved automation features coming soon to Maker. 

Screenshot 2022 03 18 at 19 13 37
  • MakerDAO
  • Rari Capital
  • Uniswap

Cryptofunds, market makers, and trading desks can interact with these DeFi protocols with MetaMask Institutional

MetaMask Institutional offers unrivaled access to the DeFi ecosystem without compromising on institution-required security, operational efficiency, or compliance requirements. We enable funds to trade, stake, borrow, lend, invest, and interact with over 17,000 DeFi protocols and applications.


Found this research useful? Connect with the ConsenSys Cryptoeconomic Research team at [email protected]

DisclaimerConsenSys Software Inc. is not a registered or licensed advisor or broker.  This report is for general informational purposes only.  It does not constitute or contain any individual investment advice and is made without any regard to the recipient’s objectives, financial situation, or means.  It is not an offer to buy or sell, or a solicitation of any offer to buy, any token or other investment, nor is it intended to be used for marketing purposes to anyone in any jurisdiction.  ConsenSys does not intend for any person or entity to rely on any facts, opinions, or ideas, and any financial or economic commentary expressed in this report may not be relied upon.  ConsenSys makes no representations as to the accuracy, completeness, or timeliness of the information or opinions in this report and, along with its employees, does not assume any responsibility for any loss to any person or entity that may result from any act or omission based upon this report.  This report is subject to correction, completion, and amendment without notice; however, ConsenSys has no obligation to do so.