ARC: Aave V3 Retroactive Funding

First things first, I support this proposal and believe Aave Companies should be rewarded for their contribution into building Aave v3.

However, I want to flag a few things that I think should be resolved in the future (echoing other people’s comments on the downsides of the Retroactive Funding model) :

  1. No other company but Aave Companies can venture into building something as expensive as Aave v3 without having some kind of certainty that their work is going to be compensated for. This creates some serious centralization risks around the protocol if Retro funding becomes the standard.
  2. The point above leads to less competition on the cost of building future protocol upgrades. We have no idea whether some other company could have done a better job 10 times cheaper - simply there is no market.
  3. Lastly, I would appreciate more transparency on the costs incurred - similarly to how public companies report on their expenses, I feel like in the case of Aave Companies we deserve to see more internal info.

Lastly, cheers to Aave for testing new approaches to funding and continuously innovating.

2 Likes

Thankyou very much for your question!

The Aave Companies has never received funding from the AaveDAO before.

1 Like

I support this proposal. I can say first hand on behalf of Ava Labs, the Aave Companies have been a pleasure to deal with. They have always put governance and security first while providing custom support to our specific needs as referenced by the Guardian.

Avalanche Aave v3 market remains the largest v3 market and their insight to deploy on Avalanche has heavily rewarded the Aave community and holders.

3 Likes

Thank you for your thoughtful response, Ernesto. We appreciate the detailed feedback and the general support you’ve shown for the proposal. You bring up some good points, and we want to take the opportunity to address them.

The proposal will be updated to provide more detail and transparency regarding the audits conducted in connection to V3. As the community is aware, we are always completely open on audits (they are posted publicly) and security and take this very seriously.

You also bring up another important point in your comment: We will re-examine how we might be able to reduce the impact on the DAO’s stable reserves, including by adjusting treasury numbers for incoming stream payments and other forms of outgoing payments to contributors.

On the topic of funding models, there is broad community consensus across the DeFi ecosystem that there should be different funding models for different types of work.

We believe the retroactive funding model used here is fair for the DAO because it enables us (as a contributor) to be accurate with our incurred costs while providing the community with the opportunity to assess the product’s value and thus support these types of proposals with confidence. Another benefit is that the community can reject the funding request if the product is not impressive and does not contribute significantly to the DAO.

Thank you again for your comment

Gauntlet commends Aave Companies for their outstanding work on Aave V3. A few thoughts below:

  • From risk management and capital efficiency perspectives, V3 provides robust features to DeFi, including e-mode, isolation mode, and additional risk parameters.
  • The pricing ($15 million) is reasonable, but not solely because of the costs incurred. Projects should also be judged on the value they drive for the protocol, and it is clear that V3 brought significant value to the Aave community.
  • While we support this proposal to provide retroactive funding to Aave Companies, we hope this does not set a precedent for retroactive funding.

We echo the thoughts of Ernesto and others on this thread regarding retroactive funding. We would encourage other contributors to discuss development work with the community before getting started. There are tradeoffs when it comes to keeping projects partially private ahead of launches, but this can be mitigated via solutions besides 100% retroactive funding. For example, contributors may provide just enough details to obtain initial funding from the DAO, they can request a stream to fund costs during development, and a bonus can be paid via retroactive funding after project launch. Of course, the optimal solution would depend on the situation. Although we fully support Aave Companies in this proposal, it would be difficult for us to support other contributors requesting retroactive funding.

2 Likes

@AaveCompanies will appreciate your thoughts in this forum on the 2 points raised by me.

1 Like

We in Certora enthusiastically support this proposal as a mechanism to incentivize talented people to improve the Aave ecosystem. The Aave Certora grant increased the impact of formal verification and participation of 100 contributors to Aave security. We thank @AaveCompanies and all contributors for their continuous efforts to improve DeFi.

1 Like

I support this proposal; Aave V3 is an important milestone in the evolution of the Aave protocol. Contributors to the development of Aave should receive adequate funding to keep pushing the development of Aave forward.

I believe in certain instances retroactive funding is the right way to do. Though as correctly pointed out, not everyone is able to take on the risk to build a major feature without upfront funding. Doing both allows for all contributors to contribute.

1 Like

I fully support the proposal, having had the privilege to work with the Aave team for nearly 3 years I can attest to both the incredible hard work they’ve contributed to the space as well as the pioneering new improvements they’ve been able to unleash with each version of their protocol most notably v3.

The distribution looks fair to me and compatible with industry standard and certainly deserved for creating and shipping mission critical code securing billions in value.

Fully in favour!

1 Like

Looking forward to responses from @AaveCompanies on the following posts:

and

I feel there is no use of discussion forum if the post author @AaveCompanies only responds to selected community comments.

1 Like

Happy to see this proposal progress!

It is increasingly important that we judge undertakings like Aave v3 in terms of the value it adds to Aave DAO rather than solely the engineering and operational costs incurred. From that perspective, the amount requested is more than commensurate with the value provided by Aave Companies. Llama and I will vote for the proposal.

In the future, it will be ideal if Aave Companies lays out a structure for getting compensated on protocol development and new initiatives like GHO. There are limits to what can be publicly discussed, but getting funded from the DAO requires managing those trade-offs. That way, the DAO knows ahead of time what it is getting into and can discuss pros and cons.

2 Likes

Thank you for your thoughtful response and recommendation @A_J. In line with your feedback, we will amend the proposal as follows:

– Aave Companies would be free to use 50% of the AAVE tokens the company received for the development of the Aave Protocol V3 after a one-year lock up from the date of DAO approval of the retroactive funding proposal, and the remaining 50% after two years from the date of the approval of the proposal.

Regarding providing details about full-time engineering and non-engineering resources dedicated to V3, this is a retroactive proposal which proposes funding for work completed, not future work. There are many contributors to the Aave ecosystem at this time, including those working on V3.

Thank you for your thoughtful feedback. Look out for updates to the proposal coming soon!

2 Likes

We would like to thank the community for your overwhelming support and enthusiasm for the Aave Companies’ ARC submitted to the community for retroactive funding for the development costs of Aave Protocol V3. We are grateful for the feedback we received regarding the funding model and audits and have incorporated this feedback into this amended proposal.

Below is a summary of amendments that we are making based on feedback from the community:

Total Funding Ask:
The total retroactive funding request for the development costs of the Aave Protocol V3 by Aave Companies is $16.28 million.

Amended Audit Summary:
Regarding the request to provide proof of receipts for amounts paid to each individual auditor for V3, although we believed that we would be able to provide this information, the confidentiality obligations in our contracts will not allow for that.

We believe transparency is important and as is customary, we share as much information as possible, and so we have provided individual code audit reports from each auditor. We encourage you to review these to understand the depth and breadth of the audits performed, which ensure critical security measures were undertaken and validated, and that the code for Aave Protocol V3 was reviewed by the auditors and such review was performed to the highest standard. Given that we are unable for contractual reasons to provide a breakdown of the costs per auditor, we are providing a 20% discount on the auditing line item, or $320,000. This amount has been removed from the total requested in AAVE tokens.

We hope that the DAO will feel comfortable with the amount of detailed information provided and that the reports provide the desired level of confidence, validation, and trust that the services described in the reports were performed.

In the future, it may be best to achieve transparency to ask auditors to make proposals directly to the community. In this case, to achieve full transparency, the audit proposals and results would go directly through the DAO.

Amended Funding Model Summary:
This updated proposal amends the original proposal, requesting that the funds be made available to the Aave team as follows for the past costs of development of Aave Protocol V3:

  • Upon agreement by the DAO, Aave Companies will receive $6.28 million in AAVE tokens to be deposited in the protocol’s Safety Module by Aave Companies as follows:
    • $3.14 million of retroactive funding provided in AAVE tokens which will be deposited in the Safety Module for a period of one (1) year after which the tokens will be free to be used, and
    • $3.14 million of retroactive funding in AAVE tokens that will be deposited in the Safety Module for two (2) years after which the tokens will be free to be used.
  • $10 million, to be reimbursed to Aave Companies as follows:
    • $5,456,993.61 million in USDC, USDT and DAI, and
    • $4,543,006.39 million comprised of:
      • $1,148,881.31 million in alternative stable assets such as sUSD and FRAX, and
      • $3,394,125.08 in higher volatility assets such as SNX and CRV.

With these proposed amendments and clarifications to the original proposal, we will go to Snapshot.

4 Likes

Disclaimer : I was part of the Aave companies in the past, during the development of Aave v3, but this is my opinion as a community member.

I support this proposal as in, “the aave companies did tremendous work and should be paid for that”.

That said I would wish for more transparency to set a better example for upcoming retroactive funding requests. If the proposal would have asked for 10M or 20M I would expect the answers in the topic to be pretty much the same as there’s no way to even vaguely estimate if it’s “fair compensation”. I think it is and not saying it isn’t just that is not very transparent from the outside.

Information which I think could be disclosed without exposing company secrets imo would be:

  • rough time of development (not necessarily hours, but i guess “months of active development” should be an information given)
  • ppl involved (there’s a graphic with the “aave pod”, but there could be more transparency on the number of ppl involved as in - is it 15M for 13ppl or 100ppl over 3month or 2years)

tl;dr;
I support the proposal, but would wish for as much transparency as possible to raise the bar for any other retroactive proposal in the future.

1 Like

We (Sigma Prime) strongly support this proposal. Retroactive funding makes complete sense in this context. We have been interacting with the Aave Companies for a few years, and have been pleased with the level of professionalism displayed by the related contributors, along with the quality of the outputs delivered.

We look forward to continuing our work with them to ensure the security posture of the Aave protocol remains best-in-class.

1 Like

Definitely in favor of this proposal :+1:

The people working at the AAVE Companies are the most badass builders out there so I do not see how anyone could object to this vote :man_shrugging:

Otherwise and as @sakulstra mentioned, it’d be nice to have a few more graphs/details for any other retroactive proposals in the future

The Snapshot for this proposal is live and voting has begun.

You can find it here: Snapshot

Thank you for incorporating my proposed changes in the final proposal.

2 Likes

The AIP for this proposal is live and voting has begun.

You can find it here: AIP

With a positive vote on the AIP, the following transfers will take place via Guardian Multisigs and on chain execution.

To decrease the number of transactions that are required by the Guardian Multisig, we have reduced the requested WBTC by 0.24516711 in order to limit transactions only to those on Avalanche.

The requested AAVE tokens will then be staked immediately and held within the stated wallet for the duration of the proposed lock-up period.

To facilitate the payment of assets in Polygon Network the proposal also upgrades the implementation of two contracts, fees collectors of V2 and V3 markets. These upgrades will be useful for future proposals since it adds the ability of retrieving funds autonomously. By approving the AIP, users are approving the upgrade of these contracts.

A summary of token transfers can be found below:

Requested Token Received Token Token Contract Address Vault Address Chain Contract Name TWAP Price # Tokens Market Value USD Discount Market Price USD (w/ discount) Market Value USD (w/ discount) Transfer Method Receiving Address
AAVE AAVE 0x7fc66500c84a76ad7e9c93437bfc5ac33e2ddae9 0x25F2226B597E8F9514B3F68F00f494cF4f286491 ETH Ecosystem Reserve 85.7513914 76196.37 6533944.52 0% 85.7513914 6533944.52 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
USDC aUSDC 0xbcca60bb61934080951369a648fb03df4f96263c 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1 2783066.72 2783066.72 0% 1 2783066.72 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
DAI aDAI 0x028171bca77440897b824ca71d1c56cac55b68a3 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1 1637098.07 1637098.07 0% 1 1637098.07 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
USDT aUSDT 0x3ed3b47dd13ec9a98b44e6204a523e766b225811 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1 1036828.78 1036828.78 0% 1 1036828.78 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WMATIC amWMATIC 0x8dF3aad3a84da6b69A4DA8aeC3eA40d9091B2Ac4 0x7734280A4337F37Fbf4651073Db7c28C80B339e9 Polygon Aave: Collector V2 0.858032437 850000.00 729327.5718 10% 0.772229194 656394.8146 On-chain 0x48B9e6E865eBff2B76d9a85c10b7FA6772607F0b
CRV aCRV 0x8dae6cb04688c62d939ed9b68d32bc62e49970b1 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1.132318243 509732.68 577179.6124 10% 1.019086418 519461.6511 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WETH aWETH 0x030ba81f1c18d280636f32af80b9aad02cf0854e 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1563.069796 350.00 547074.4287 10% 1406.762817 492366.9859 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
SUSD aSUSD 0x6c5024cd4f8a59110119c56f8933403a539555eb 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.998205608 463358.33 462526.8825 0% 0.998205608 462526.8825 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WAVAX avWAVAX 0xDFE521292EcE2A4f44242efBcD66Bc594CA9714B 0x467b92af281d14cb6809913ad016a607b5ba8a36 Avalanche Aave: Collector V2 19.06490125 19415.70 370158.3681 10% 17.15841112 333142.5313 Manual 0xa8F8E9c54e099c4fADB797f5196E07ce484824aF
WBTC amWBTC 0x5c2ed810328349100A66B82b78a1791B101C9D61 0x7734280A4337F37Fbf4651073Db7c28C80B339e9 Polygon Aave: Collector V2 19984.92868 16.66 332870.7781 10% 17986.43581 299583.7003 On-chain 0x48B9e6E865eBff2B76d9a85c10b7FA6772607F0b
TUSD aTUSD 0x101cc05f4a51c0319f570d5e146a8c625198e636 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.99563 292839.52 291559.8099 0% 0.99563 291559.8099 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
SNX aSNX 0x35f6b052c598d933d69a4eec4d04c73a191fe6c2 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 2.964211424 96251.92 285311.0409 10% 2.667790282 256779.9368 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WAVAX aAvaWAVAX 0x6d80113e533a2C0fe82EaBD35f1875DcEA89Ea97 0x5ba7fd868c40c16f7aDfAe6CF87121E13FC2F7a0 Avalanche Aave: Treasury V3 19.06490125 9584.30 182723.768 10% 17.15841112 164451.3912 Manual 0xa8F8E9c54e099c4fADB797f5196E07ce484824aF
FRAX aFRAX 0xd4937682df3c8aef4fe912a96a74121c0829e664 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.98605 154992.10 152829.9602 0% 0.98605 152829.9602 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
BUSD aBUSD 0xa361718326c15715591c299427c62086f69923d9 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.99536 130399.26 129794.2045 0% 0.99536 129794.2045 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
GUSD aGUSD 0xd37ee7e4f452c6638c96536e68090de8cbcdb583 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.9861 86354.30 85153.97523 0% 0.9861 85153.97523 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
LINK aLINK 0xa06bc25b5805d5f8d82847d191cb4af5a3e873e0 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 6.740178811 12053.48 81242.6105 10% 6.06616093 73118.34945 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
MANA aMANA 0xa685a61171bb30d4072b338c80cb7b2c865c873e 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.770717202 103234.63 79564.70516 10% 0.693645482 71608.23464 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WBTC aWBTC 0x9ff58f4fFB29fA2266Ab25e75e2A8b3503311656 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 19984.92868 3.39 67719.94705 10% 17986.43581 60947.95235 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
YFI aYFI 0x5165d24277cd063f5ac44efd447b27025e888f37 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 9083.603781 7.08 64311.91477 10% 8175.243403 57880.72329 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WBTC avWBTC 0x686bEF2417b6Dc32C50a3cBfbCC3bb60E1e9a15D 0x467b92af281d14cb6809913ad016a607b5ba8a36 Avalanche Aave: Collector V2 19984.92868 1.81 36115.69031 10% 17986.43581 32504.12128 Manual 0xa8F8E9c54e099c4fADB797f5196E07ce484824aF
USDP aPAX 0x2e8F4bdbE3d47d7d7DE490437AeA9915D930F1A3 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.98916 26871.32 26580.03489 0% 0.98916 26580.03489 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
CVX aCVX 0x952749e07d7157bb9644a894dfaf3bad5ef6d918 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 5.090221056 5137.26 26149.78902 10% 4.58119895 23534.81012 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
MKR aMKR 0xc713e5e149d5d0715dcd1c156a020976e7e56b88 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 753.6358851 30.36 22880.38547 10% 678.2722966 20592.34692 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WBTC aAvaWBTC 0x078f358208685046a11C85e8ad32895DED33A249 0x5ba7fd868c40c16f7aDfAe6CF87121E13FC2F7a0 Avalanche Aave: Treasury V3 19984.92868 1.08 21529.26824 10% 17986.43581 19376.34141 Manual 0xa8F8E9c54e099c4fADB797f5196E07ce484824aF
KNC aKNC 0x39c6b3e42d6a679d7d776778fe880bc9487c2eda 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1.743572014 11236.27 19591.24528 10% 1.569214813 17632.12075 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
UNI aUNI 0xb9d7cb55f463405cdfbe4e90a6d2df01c2b92bf1 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 6.192716415 1681.27 10411.60038 10% 5.573444774 9370.440344 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
WBTC WBTC 0x2260fac5e5542a773aa44fbcfedf7c193bc2c599 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 19984.92868 0.45 8908.684454 10% 17986.43581 8017.816009 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
RAI aRAI 0xc9bc48c72154ef3e5425641a3c747242112a46af 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.132370212 66094.61 8748.957544 10% 0.119133191 7874.06179 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
ENJ aENJ 0xac6df26a590f08dcc95d5a4705ae8abbc88509ef 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.512301258 7242.48 3710.331613 10% 0.461071132 3339.298452 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
xSUSHI aXSUSHI 0xf256cc7847e919fac9b808cc216cac87ccf2f47a 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1.392954953 2331.22 3247.278885 10% 1.253659458 2922.550996 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
BAT aBAT 0x05ec93c0365baaeabf7aeffb0972ea7ecdd39cf1 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.33492553 6395.16 2141.902354 10% 0.301432977 1927.712119 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
REN aREN 0xcc12abe4ff81c9378d670de1b57f8e0dd228d77a 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.121321645 15300.17 1856.241786 10% 0.10918948 1670.617608 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
KNC KNC 0xdd974d5c2e2928dea5f71b9825b8b646686bd200 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 1.743572014 795.22 1386.523968 10% 1.569214813 1247.871571 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
BUSD BUSD 0x4fabb145d64652a948d72533023f6e7a623c7c53 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.99536 350.36 348.7372133 0% 0.99536 348.7372133 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
TUSD TUSD 0x0000000000085d4780B73119b644AE5ecd22b376 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 0.99563 88.14 87.75622103 0% 0.99563 87.75622103 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
UNI UNI 0x1f9840a85d5af5bf1d1762f925bdaddc4201f984 0x464c71f6c2f760dda6093dcb91c24c39e5d6e18c ETH Aave: Aave Collector V2 6.192716415 4.39 27.21397049 10% 5.573444774 24.49257344 On-chain 0x1c037b3C22240048807cC9d7111be5d455F640bd
2 Likes

We thank the Aave community for your supportive votes on the retroactive funding proposal. We want to inform the DAO that the transfers were executed on 9/9/22.

Upon full examination and due diligence related to each transfer, we identified an error that occurred when calculating the pay-out price of RAI.

Instead of pricing RAI at $2.63 , it was priced at $0.13. This resulted in an overpayment for the 66,094.61 aRAI.

We executed a full return of all 66,094.61 aRAI to the DAO on 23/9/22.

Transaction Link: Ethereum Transaction Hash (Txhash) Details | Etherscan

4 Likes