Aave Automates Risk Management with Chaos Labs’ Oracles

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Aave is recognized as the largest lending protocol in decentralized finance and has been collaborating with risk management firm Chaos Labs for an extended period. Aave has commenced using oracles developed by Chaos Labs.

Innovation in Risk Management

This initiative enables the lending protocol to automatically adjust its risk parameters. Elements such as liquidation thresholds and supply and borrowing capacities are managed through this automation.

Chaos Labs follows Chainlink as Aave’s second oracle provider. Oracles play a significant role by transmitting external data to smart contracts.

“Aave is deployed across more than ten networks. Each network has an average of ten markets, with over thirty different parameters for each market. There are thousands of parameters that need to be managed in real-time.”

Omer Goldberg, CEO of Chaos Labs

Chaos Labs’ “Edge Risk Oracle” now automates Aave’s risk management system in real-time, enhancing the protocol’s security and capital efficiency.

Advantages of Automation

The governance body of Aave DAO, composed of AAVE token holders, approved these innovations with a majority vote on November 15. This approval includes automatic interest rate updates for WETH assets in Lido.

“The integration of Edge Risk Oracles signifies a significant technical advancement for Aave. By enabling real-time optimization of critical risk parameters, we can enhance the protocol’s stability.”

Emilio Frangella, Vice President of Engineering at Aave Labs

Previously, the Aave community had to manually adjust protocol parameters. Thanks to Chaos Labs’ oracles, this process has been reduced to mere minutes.

The automated adjustment of risk parameters allows the protocol to better adapt to rapid market changes, resulting in a safer and more efficient user experience.

Aave’s total value locked stands at 19 billion dollars, a level not seen since October 2021. These innovations strengthen Aave’s leadership position in the DeFi ecosystem, providing users with a safer and more efficient platform.

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