AAVE Panel Eyes DAI Risk Parameters Overhaul Amid MakerDAO Expansion

Aave Risk Framework Committee (ARFC) proposes revising risk parameters for DAI stablecoin, including setting loan-to-value (LTV) ratio to 0% and eliminating sDAI incentives from Merit program. Simultaneously, MakerDAO outlines a "Endgame" plan to increase DAI market capitalization, including rebranding and user interface improvements. Furthermore, Eigenlayer surpasses AAVE as the second-largest DeFi protocol by total value locked (TVL), while AAVE maintains significant daily user engagement.

AAVE Risk Framework Committee Proposes DAI Risk Parameter Revision Amidst MakerDAO's Expansion

In a significant move to address the rapid growth of the DAI stablecoin, the AAVE Risk Framework Committee (ARFC) has introduced a proposal to revise the risk parameters for the cryptocurrency.

Loan-to-Value Ratio Reduction to 0%

The proposal, spearheaded by the AAVE Chan Initiative (ACI) team, recommends setting the loan-to-value (LTV) ratio for DAI at 0% across all AAVE platforms. This change aims to mitigate potential risks associated with the recent expansion of MakerDAO's D3M plan, which has led to a substantial increase in the DAI credit line.

Elimination of sDAI Incentives

The proposal also recommends eliminating sDAI incentives from the Merit program starting from Merit Round 2. This measure is intended to manage the risks stemming from the rapid expansion of DAI and the potential for a small portion of DAI deposits being used as collateral on AAVE.

MakerDAO's "Endgame" Transformation

In a parallel development, MakerDAO has initiated its "Endgame" metamorphosis, a five-phase plan outlined by co-founder Rune Christensen. The transition aims to boost the decentralized stablecoin DAI's market capitalization to "100 billion and beyond." Key aspects of the plan include rebranding MakerDAO with an external marketing agency and streamlining the user interface for DAI's system.

AAVE Retains Strong User Engagement

Despite the recent rise of Eigenlayer as the second-biggest DeFi protocol by total value locked (TVL), AAVE maintains substantial daily user engagement, reflecting the dynamic nature of the DeFi market.

DefiLlama Data Unveils Industry Shifts

According to data from DefiLlama, the DeFi industry has witnessed notable shifts, with Eigenlayer surpassing AAVE as the second-ranked protocol in terms of TVL, while Lido remains in the top position.

Conclusion

The AAVE Risk Framework Committee's latest proposal is a proactive response to the rapid expansion of DAI and its potential implications for the AAVE ecosystem. MakerDAO's "Endgame" transformation, designed to enhance DAI's market reach and accessibility, aligns with the broader trend of innovation and growth in the DeFi sector. The industry's continuous evolution and the emergence of new players, such as Eigenlayer, underscore the dynamic and ever-changing landscape of decentralized finance.