# Chaos Labs V2 Ethereum and Polygon LT Reductions
AI summary
This proposal aims to reduce the Liquidation Thresholds (LT) for several crypto assets on Aave V2 on both the Ethereum and Polygon networks. Liquidation Thresholds determine how much collateral a user must maintain to avoid their loan being automatically liquidated. This change is part of a broader plan to phase out or 'deprecate' older assets on Aave V2.
If this proposal passes, users who have borrowed against the affected assets on Aave V2 Ethereum and Polygon will face a higher risk of liquidation, as their collateral will be considered less valuable. This could lead to approximately $120,000 worth of assets becoming eligible for liquidation, potentially benefiting liquidators and reducing risk for the Aave protocol by encouraging users to migrate to newer versions or repay loans.
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Chaos Labs V2 Ethereum and Polygon LT Reductions
title: "Chaos Labs V2 Ethereum and Polygon LT Reductions" author: "Chaos Labs" discussions: "https://governance.aave.com/t/arfc-v2-ethereum-and-polygon-lt-reductions-12-04-2023/15747"
Simple Summary
A proposal to reduce Liquidation Thresholds on Aave V2 Ethereum and Polygon.
Motivation
Following the v2 deprecation framework, Chaos Labs and Gauntlet advise implementing the subsequent parameter changes to the frozen assets on Aave v2 Ethereum and Pol…