Aave proposal: Reduce USDS LTV to 0, remove collateral eligibility, and increase reserve factor to 25%

The Aave community has passed a proposal to remove the collateral eligibility of USDS (adjusting LTV to 0), exclude it from e-Mode, and increase the reserve factor (RF) from 10% to 25%, currently awaiting final execution of the AIP.

The main reasons are the decline in USDS yield contribution, low collateral utilization, and potential risk exposure from the issuance mechanism.

MakerDAO founder Rune responded that the proposal misunderstands the borrowing methods of Stars like Spark and Grove from Sky, stating that they have actually paid reasonable interest rates and settled regularly. He emphasized that if Sky significantly improves transparency and scalability through Data Hub, Grove, and Sentinel Network in the future, USDS still has a chance to return to the Aave collateral asset list, promoting broader adoption.