[ARC] Aave V3 Ethereum Deployment: Assets and Configurations

The DeFi Pulse Index, operated by Index Coop, has been available as collateral on Aave v2 markets for over a year. Snapshot vote for reference.

When referencing the recent Mango Markets incident, I assume this means oracle manipulation. TVL should not be the sole parameter for determining the risk of price manipulation. For DPI, in particular, the permissionless mint/redeem capabilities (as mentioned by Llama) allow for arbitrage opportunities when any of the underlying assets see significant price deviation.

Index Coop previously dealt with an attack similar to the recent Mango incident. At the start of the year, an attacker attempted to manipulate an oracle for the BED Index through Rari markets. This attack was unsuccessful because all Index Coop products can be freely minted making it easy for arbers to act quickly. This thread gives a detailed account of this failed attack. Moreover, our Flashmint functionality makes this arbitrage opportunity even easier, using Aave to instantly create a flashloan into the position. We’ve seen significant volume in our Flashminting contracts up until now and expect any significant deviation to see an immediate arb.

As Aave and the defi ecosystem matures, Index Coop believes structured products with inherent risk management are critical. We’ve seen larger DPI holders use DPI as collateral on Aave and expect this to continue as we strive to get DPI into the hands of more traditional investors. We hope to see DPI listed amongst this first batch of assets and bring increased buy pressure for the largest tokens in DeFi including AAVE. While DPI is one of the lower market cap assets, it is far less risky for Aave than most assets being proposed. As one of the largest voters in AAVE governance we looks forward to voting on these new assets in V3 and are happy to answer any questions.

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