The Aave (AAVE) community has sought to update the risk parameters of MakerDAO’s Dai (DAI) stablecoin to minimize the potential risks associated with the token’s issuance policy.
In the proposal, author Marc Zeller highlighted that MakerDAO’s D3M program has led to a major spike in the credit line for Dai. According to him, the credit line is expected to hit 1B in Dai in the near future, making the stablecoin extremely risky for the Aave ecosystem. He added,
“The Aave protocol had previous experience of the consequences of reckless minting policies at a much smaller scale, with Angle’s AgEUR (now EURA) mint into EULER a week before their hack and jEUR minting into Midas leading to the asset long-term depeg.”
As such, he proposed setting the LTV of Dai to 0% across all Aave networks. He further noted that Aave utilizes a small percentage of the Dai deposits as collateral, and users can easily switch to USD Coin (USDC) and Tether (USDT) as alternatives.
So far, the proposal has gained a mixed response from the Aave community. Some members have suggested offboarding Dai altogether. Meanwhile, others have warned about the consequences of lowering the LTV for Aave chains like Gnosis, which are heavily reliant on the stablecoin. That said, the proposal is still in its early stages, and it will need to gain more traction before it can proceed to the snapshot stage.
