Discussion on Risk Adjustment Authority Segmentation for Aave V4

Aave is discussing a plan to segment the risk adjustment authority for its V4 instances on Ethereum (ETH) and Avalanche (AVAX). In emergency situations, it can halt or freeze the market, but the authority to reverse this will remain with governance. Aave Labs submitted a proposal titled 'Activate Aave Risk Stewards on Aave V4' to the governance forum on August 21, and it reached the snapshot stage on September 3. The proposal divides the setting administrator authority for each instance into five detailed roles, which include blocking all activities, blocking new activities, listing, emergency response, and risk management. The risk management role adjusts specific risk variables within a predetermined range and waiting time, while the emergency role only performs functions such as deactivation, suspension, pausing, and freezing. The emergency role will not be activated immediately in this release and will not be called until a future release. The risk management targets include optimal utilization rates, base borrowing rates, and interest rate increases. Aave V4 is designed to be divided into a hub that gathers liquidity and spokes that handle user lending logic, which is intended for large lending protocols to manage risks across multiple markets. According to the Aave Governance Framework v2 document, freeze stewards can freeze immediately, but unfreezing requires governance approval. According to a development update on September 1, the deposits for V4 exceeded $800 million in August, and active loans reached an all-time high. The final approval status of the proposal had not been confirmed as of the 7th.

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