Aave Generalized Risk Stewards (AGRS)

Expanding from the scope of CapsPlusRiskSteward, we now introduce the new RiskSteward, allowing hardly constrained risk parameter updates by risk service providers and reducing governance overhead.

Specification

The new RiskSteward we propose follows the same design as the CapsPlusRiskSteward: a smart contract to which the Aave Governance gives POOL_ADMIN the role over all v3 instances. It is controlled by a 2-of-2 multi-sig and is heavily constrained on what can do and how by its own logic.

Note: The Risk Stewards will only be available for Aave V3.1 instances and not Aave V2 (or previous Aave v3) due to missing admin roles on Aave V2 instances and other incompatibilities.

The following risk params could be changed by the RiskStewards:

• Supply Caps

• Borrow Caps

• LTV

• Liquidation Threshold

• Liquidation Bonus

• Debt Ceiling

• Base variable borrow rate

• Slope 1

• Slope 2

• Optimal point

• Cap parameters for PriceCapAdapters (CAPO)

Min Delay:

For each risk param, minDelay can be configured, which is the minimum amount of delay (denominated in seconds) required before pushing another update for the risk param. Please note that this is specific for a risk param and includes both in upwards and downwards direction. Ex. after increasing LTV by 5%, we must wait by minDelay before either increasing it again or decreasing it.

Max Percent Change:

For each risk param, maxPercentChange is the maximum percent change allowed (both upwards and downwards) for the risk param using the RiskStewards.

• Supply cap, Borrow cap, and Debt ceiling: The maxPercentChange is relative and is denominated in BPS. (Ex. 50_00 for +-50% relative change). For example, with an asset's current supply cap at 1_000_000 and maxPercentChange configured for supply cap at 50_00, the max supply cap that can be configured is 1_500_000, and the minimum is 500_000 via the steward.

• LTV, LT, LB: The maxPercentChange is in absolute values and is also denominated in BPS. (Ex. 5_00 for +-5% change in LTV). For example, for a current LTV of an asset configured at 70_00 (70%) and maxPercentChange configured for ltv at 10_00, the max ltv that can be configured is 77_00 (77%) and the minimum 63_00 (63%) via the steward.

• Interest rates params: For Base Variable Borrow Rate, Slope 1, Slope 2, uOptimal the maxPercentChange is in absolute values and is denominated in BPS. For example, for a current uOptimal of an asset configured at 50_00 (50%) and maxPercentChange configured for uOptimal at 10_00, the max ltv that can be configured is 55_00 (55%) and the minimum 45_00 (45%) via the steward.

• LST Cap adapter params: snapshotRatio must be less or equal to the actual one. The maxPercentChange is applied to maxYearlyGrowthPercent, it is relative and is denominated in BPS. (Ex. 10_00 for +-10% relative change). For example, for a max yearly growth percent at 10_00 and maxPercentChange configured at 10_00, the max yearly growth percent that can be configured is 11_00 and the minimum 9_00 via the steward.

• Stable price cap: the maxPercentChange is in relative values. For example, for a current price cap of an oracle configured at 1_10_000000 and maxPercentChange configured at 1_00, the max price cap that can be configured is 1_11_100000 and the minimum 1_08_900000 via the steward.

After the activation proposal, these params could only be changed by the governance by calling the setRiskConfig() method.

Note: The Risk Stewards will not allow setting the values to 0 for supply cap, borrow cap, debt ceiling, LTV, Liquidation Threshold, Liquidation Bonus no matter if the maxPercentChange has been configured to 100%. The Risk Stewards will however allow setting the value to 0 for interest rate param updates.

Restricted Assets and Oracles:

Some assets/oracles can also be restricted on the RiskStewards by calling the setAddressRestricted() method. This prevents the RiskStewards to make any updates on the specific asset. One example of the restricted asset could be GHO.

AGRS + Edge Infrastructure (Risk Oracles)

With the introduction of Edge Risk Oracles by Chaos Labs, which leverages advanced off-chain infrastructure to deliver real-time risk updates to the Aave protocol via the Risk Oracle, the risk updates for the Aave protocol can be automated in a constrained manner. This can be done by combining the Edge Risk Oracle with the Aave Risk Steward, using a middleware contract AaveStewardsInjector.

The Aave Risk Steward contract used for automated updates (called now EdgeRiskSteward), has been slightly modified to only allow Interest Rates Updates on the protocol initially as a matter of extra security considerations.

The following is a simple diagram of how the system works as a whole:

AaveStewardsInjector

The AaveStewardsInjector is a Chainlink automation compatible contract which checks if the latest update from the Edge Risk Oracle could be pushed to the Risk Steward, and if so, injects it to the Aave Risk Stewards. The AaveStewardsInjector should be set as the riskCouncil on the Aave Risk Steward contract so it can inject updates.

The AaveStewardsInjector has the following major functions:

• checkUpkeep(): This method is called off-chain by Chainlink nodes every block to check if the latest update could be injected, and if so, calls performUpKeep(). It fetches the latest interest rate update for the whitelisted asset (initially WETH) using the getLatestUpdateByParameterAndMarket() method on the Risk Oracle, and checks if the update can be injected into the Risk Steward if not already executed before. If the latest update is not executed or disabled the method returns true.

• performUpkeep(): The performUpkeep() method is called by the Chainlink automation nodes when the checkUpkeep() method returns true. The performUpkeep() call injects the latest update on the Risk Steward, unless that update has been disabled by the steward injector guardian or previously executed. After an update has been injected on the Risk Steward using the params from the Risk Oracle, we mark the updateId as executed on storage mapping _isUpdateIdExecuted[id]. The performUpkeep() method is permissionless on purpose, so as to allow injections from the Risk Oracle to the Risk Steward even in case of some downtime on the automation infra via a manual trigger.

The Stewards Injector Guardian is an entity, which is the owner of the AaveStewardsInjector contract and has access to disable updates for the specific updateId using the disableUpdateById() method in case of any emergencies. The guardian can also change / add update types using the addUpdateType() method, to whitelist the type of updates that can be injected via the Stewards Injector.

The AaveStewardsInjector contract also introduces an EXPIRATION_PERIOD to disallow outdated risk param updates to be injected. The EXPIRATION_PERIOD is set to 6 hours, which means after an update is pushed on the Edge Risk Oracle, the AaveStewardsInjector has a maximum of 6 hours to inject the update onto the Risk Steward otherwise the update expires.

Security

• Certora security review: 2024-07-10

Setup

cp .env.example .env
forge install

Test

forge test

License

Copyright © 2024, Aave DAO, represented by its governance smart contracts.

The BUSL1.1 license of this repository allows for any usage of the software, if respecting the Additional Use Grant limitations, forbidding any use case damaging anyhow the Aave DAO's interests. Interfaces and other components required for integrations are explicitly MIT licensed.