@JeremyKeating this is a particularly interesting idea.
Financial reports, while important for telling stories of the past, give more color on the future health of the company or organization. I believe this standard could be applied to crypto.
Assuming discount rates and applying them to current cash flows could be an adequate way to model this. Take a DCF (discounted cash flow) as an example:
To accurately complete this calculation it would require years (or in this case) months of data.
DCF’s are a popular way to evaluate the future value of an investment.
Borrowing this idea from traditional finance, modeling would allow for more robust due diligence and investment decisions. $AAVE token holders would become more informed and set expectations for the core team and protocol. By doing so it would more closely tie the token valuation to the TVL, revenues, and health of the protocol. Establishing regular financial reporting would become a competitive advantage and would further Aave as a luminary in the industry.
An important integration would be to make sure all protocols are operating off of the same methods of financial reporting.This has been a challenge of crypto and is something regulators, accountants, and investors have yet to figure out. By doing so it would create a baseline which would allow for the comparison of different DeFi protocols.
Are we comfortable with advocating for Llama’s services adopted across other treasuries? What is the best cadence for reporting? Monthly? Quarterly? Or something different? By doing so is it encouraging the proliferation of algorithmic trading and bots for DeFi tokens?
If no - are we aware of any DAO’s or companies that are doing this internally? The answer may be yes and these records should remain public for users to see. This is the goal and epitome of decentralization; to provide more transparency and trust within the community.
These are the questions I consider in terms of next steps and need for the protocol. It will be interesting to see how the release of ARC will contribute to Aave’s revenue.
@MatthewGraham - to do so would it require more resources? If so, this may be a worthwhile grant from the protocol and we would support a proposal requesting additional funding.
Please keep us in the loop as you continue to provide more transparency and finance to major DeFi protocols. In blockchain, we believe success is communal and we remain excited for the future of Aave.