AaveDAO risk management contractor Chaos Labs proposed a 12% reduction in the Dai loan-to-value ratio after the stablecoin became partially backed by eUSD.
The Aave decentralized autonomous organization (AaveDAO) continued to debate limits to Dai (DAI) collateral on April 5, as risk management consultants Chaos Labs offered a new proposal to reduce Dai loan-to-value ratios (LTV) by 12%. Previously, Aave Chan initiative founder Marc Zeller had argued for a 75% reduction.
Aave is a crypto lending platform that runs on multiple blockchain networks. It allows borrowers to take out loans in one cryptocurrency while depositing another as collateral. It is governed by holders of the Aave token, who collectively form AaveDAO. Dai is an algorithmic stablecoin backed by multiple forms of crypto collateral, including USDC (USDC), Ethereum (ETH), and others. Dai is issued by the Maker protocol, which is governed by MakerDAO.
MakerDAO was criticized on the AaveDAO forums on April 2 after it minted 600 million DAI and deposited it in a vault with decentralized lending protocol Morpho. An April 1 proposal on the MakerDAO forums attempted to increase the vault's minting limit to 1 billion DAI, potentially leading to an even greater supply of the stablecoin.
