Aave initiates a new proposal to adjust the risk parameters of DAI collateral and set the LTV to 0

ChainCatcher news, the Aave community has initiated a new ARFC proposal aimed at adjusting the risk parameters of the DAI stablecoin.

It is reported that the proposal was put forward by the Aave Chan Initiative (ACI) team, recommending to adjust the loan-to-value ratio (LTV) of DAI to 0% across all Aave deployments and to remove sDAI incentives from the Merit program, effective from Merit Round 2 and onwards.

Additionally, this move is intended to address the aggressive actions of MakerDAO's recent D3M plan, which has caused DAI's credit line to grow from zero to a projected 600 million DAI in less than a month, and potentially increase to 1 billion DAI in the short term, thereby increasing the risk of DAI as collateral. Considering that currently only a small portion of DAI deposits are used as collateral on Aave, and users can easily switch to USDC or USDT as alternative collateral options, the purpose of the proposal is to mitigate potential risks without significantly impacting the user base.