ARC: Aave V3 Retroactive Funding

Executive Summary

Following the successful launch of V3 of the Aave Protocol, this Aave Request for Comment (ARC) seeks community feedback and validation for a governance proposal to the Aave DAO seeking retroactive funding for the development and deployment of V3 by the Aave Companies.

Aave V3 provided enhanced features to the Aave Protocol based on community feedback, solving limitations in V2 while pushing important new features to the forefront of the protocol and contributing to the overall success and strength of the Aave ecosystem.

Some of the important new features include:

  • New modes such as the High Efficiency Mode and Isolation Mode which allow for increased capital efficiency whilst limiting risks for the protocol.
  • Risk Management Improvements providing additional protection to the protocol through risk caps and other tools.
  • L2-Specific features which improve user experience and reliability.
  • Portal, which allows assets to seamlessly flow between Aave V3 markets over different networks

We propose that the Aave DAO retribute $15 million (incurred work) and $1.28 million (audit) to the Aave Companies to retroactively fund the development of V3. This funding request covers work done by members of the Aave Companies over the course of more than a year.


A focus on risk management and capital efficiency and a contemporaneous reinforcement of the flexibility and decentralization of the protocol has been instrumental in the success of Aave V3.

Aligned with Vitalik’s take on retroactive public goods funding—it’s easier to agree on what was useful than what will be useful—the benefit of hindsight allows the community to make an accurate and fair quantification of the work done on V3 against the backdrop of V3’s post-launch success, as well as the potential for V3 moving forward.

This ARC follows this logic, seeking retroactive funding for the work that went into V3, which allows the community to view V3’s success since its launch, as noted in the initial proposal: “The community will also be able to decide whether to provide retroactive funding to those who contributed to the creation of V3, and how much funding to provide.”

Context: Decentralization and Incentivizing Contributors

It is imperative that the Aave protocol ecosystem remains as decentralized as possible. This is why contributors to the Aave protocol such as BGD Labs, Certora, SigmaPrime, Llama and Gauntlet have been able to build sustainable businesses within the Aave ecosystem. By working on the protocol, interacting with governance, and collaborating, all these different contributors add to the decentralized space.

Contributors interact with the protocol and the DAO in a symbiotic circle, as demonstrated in the diagram below:

Each part of this symbiotic circle is integral to the whole. Contributors help to develop the protocol and ensure that protocol revenue continues to grow in a sustainable manner. Innovations and contributions help attract more users by improving user experience and developing new products and services. Protocol revenue, in part, then gets redirected to the DAO; bolstering the DAO treasury to continue fuelling innovations in the Aave ecosystem.

The DAO has the ability to fund contributors within the ecosystem, spurring further innovation and ensuring that contributors can operate successfully in this environment. This incentivizes groups to continue to build, in turn contributing efforts that benefit the Aave community and the cycle continues.

Therefore, for the Aave Protocol to continue to develop, contributors need to be able to build and sustain successful businesses through decentralized funding methods within the ecosystem.

Aave Companies as a Contributor

The revenue created across versions of the Aave Protocol adds to the sustainability of the DAO, facilitating the funding of a variety of contributors within the ecosystem through various types of cryptoassets.

With request, permission and support granted by the Aave DAO, the Aave Companies have been an important contributor for the protocol, alongside others such as BGD Labs, Gauntlet, Certora, SigmaPrime, Llama and others. We have been building exciting innovations within the Aave ecosystem and want to continue doing so. A brief overview of this work that has taken place over many years is visualized in the simple diagram below:

As the Aave protocol has grown into what it is today, costs associated with development have risen substantially. For example, security has always been a cornerstone of protocol development, and this has become more crucial as Aave’s TVL has increased. Building an innovative, secure and battle-tested version of a protocol such as Aave V3 requires experienced builders across a variety of skill sets that are fairly compensated for their work.

V3’s Technological Advancements and Success

In 2019, the first version of the Aave Protocol smart contracts was deployed on Ethereum. Users were able to obtain and provide liquidity and earn yield on the liquidity they provided. In 2021, V2 of the Aave Protocol saw new features such as credit delegation, debt tokenization, and optimized gas costs. V2 established the Aave Protocol as a DeFi primitive, substantially growing the community and ecosystem.

Whilst V2 provided a solid foundation, through community feedback, it became clear that to scale the Aave Protocol, capital efficiency and risk management would need to be central to the protocol’s functionalities.

Aave V3 therefore iterates on the previous versions, solving limitations present in V2 while pushing innovative features to the forefront of the protocol. Here are just a few of these features and improvements:

  • High Efficiency Mode allows borrowers to extract the highest borrowing power out of their collateral;
  • Isolation Mode limits exposure and risks to the protocol from newly listed assets by only permitting borrowing up to a specific debt ceiling;
  • Risk Management Improvements provide additional protection for the protocol through various risk caps and other tools;
  • L2-Specific Features designs specific to Layer 2 networks to improve user experience and reliability;
  • Portal allows assets to seamlessly flow between Aave V3 markets over different networks;
    Community Contribution facilitates and incentivizes community usage through a modular, well-organized codebase.

These new features offer flexibility for Aave V3 users. In the last few months, new markets have been created based on community proposals thanks to the V3 supply caps and isolation mode, which add risk mitigation features so that the community can manage such markets on the Aave Protocol.

One of the most talked about features of V3, Portal, has already found a use case for bridges like Connext as detailed in their proposal to the Aave DAO, allowing for Connext’s LPs to access immediate extra liquidity to fulfil transactions in a trust minimized way. Other proposals have followed suit, such as this one from deBridge.

V3 has also seen demand for stable Efficiency Mode (eMode), with proposals for new asset listings such as this one for FRAX continually taking advantage of Aave V3’s capital efficiency. So far, over 4,100 borrowing addresses have enabled eMode, accounting for 12% of all borrowing wallets on V3. Power users and automated strategies likely will utilize eMode more frequently as more liquidity enters market ecosystems. In light of recent significant crypto market events, risk management features such as isolation mode have also proven to be prescient.

Aave V3 markets attracted liquidity quickly, with the Avalanche V3 market growing to a market size of $2.22 billion, driven by the Avalanche Rush rewards despite adverse market conditions. Much of this growth was in stable assets, accounting for ~60% of total supply since mid-April. We have seen this growth in activity mirrored on V3 on Optimism, which in the recent weeks has risen to a market size of $2 billion. We expect this increase in liquidity and usage to be mirrored across other versions of Aave V3 moving forward.

During May and June’s difficult crypto-ecosystem events, liquidations functioned well across V3 markets, minimizing insolvencies while market size was reduced by two thirds. V3 also provides the ability to set liquidation collection factors, meaning the DAO can benefit from fee accumulation during liquidation events. This is particularly pertinent given the extent of recent liquidation events in the industry.

These examples are only the tip of the iceberg, and we expect V3 to continue to further prove itself over time as users experiment with the new features and opportunities. The Aave Grants DAO has been playing, and will continue to play, a large role in this by helping to fund creative projects that take advantage of V3 and add value to the Aave ecosystem.

What is the Compensation Model based on?

We propose that the Aave DAO retribute $15 million (work incurred) and $1.28 million (audits) to the Aave Companies to retroactively fund the development of Aave V3, cover the cost of audits, incentivize further building on the Aave Protocol, and enable sustainable building within the Aave ecosystem. This request covers the work done by members of the Aave Companies over more than a year.

Overall, there were multiple functions involved in V3’s creation. These functions included Data Science, Risk Management, QnA, Dev Ops, Smart Contract Engineering, Front-end Engineering, Back-end Engineering, Product, and Design. On top of the direct work done on V3 by the aforementioned departments there were a number of supporting measures that helped maintain high standards of security and quality throughout the process.

Below you can find a breakdown of the different teams that make up the Aave V3 Working Group at the Aave Companies:

In terms of costs related to incurred work for V3, 60% are associated with engineering roles, whilst 40% are related to non-engineering roles.

More than full-time personnel costs, there were significant operational costs associated with the creation of V3, from equipment to software, which is included in our calculations for incurred work.

There were also two rounds of extensive and in-depth audits. The first round of audits was conducted by ABDK, OpenZeppelin, Trail of Bits, and Peckshield. The second round was done by SigmaPrime. Certora provided formal verification. These were important expenses given the Aave community’s high standards regarding security and ethos. A more digestible breakdown of these security measures is shown in the table below:

Auditor Date Report Round
ABDK 27-01-2022 ABDK 1
OpenZeppelin 01-11-2021 OpenZeppelin 1
Trail of Bits 07-01-2022 Trail of Bits 1
Peckshield 14-01-2022 Peckshield 1
SigmaPrime 14-01-2022 SigmaPrime 2

Compensation Model

If the AIP is approved by the DAO, the Aave team will receive $16,280,000 million in retroactive funding for the development of Aave Protocol V3. The funding will consist of $5,456,993.61 between DAI, USDT and USDC; $1,148,881.31 in alternative stable assets, $3,394,125.08 million in more volatile crypto assets; and $6,280,000 million in AAVE tokens.

The $6.28 million in AAVE tokens requested will be based on a 14-day TWAP - time weighted average price (average of open, high, low, close) per Messari at UTC+0 - from the moment the proposal is approved in a Snapshot vote.

The funding of the aforementioned $6.28 million in AAVE tokens will be reimbursed with two lock-up periods. 50% of the AAVE tokens received will be deposited in the Safety Module for one year, whilst the other 50% of AAVE tokens will be deposited in the Safety Module for two years. During this time, the tokens will contribute to the protocol safety module, helping to reduce risk for the protocol. Based on this model, Aave Companies would be free to use the tokens after the end of each lock-up period.

We request that the USDC, DAI, and USDT be broken down as follows:

Approximate % Breakdown 51% 30% 19%
Total $ Value Requested $2,783,066.74 $1,637,098.08 $1,036,828.78

Regarding the $1,148,881.31 in alternative stable assets, a small volatility discount has been applied to each asset to account for peg fluctuations and low liquidity. These discounts are based on the lowest close price of each asset in the past 90 days. An itemized view of the requested alternative assets and their respective discounts can be found below:

Token Volatility Discount Number Value
sUSD -0.2% 463,358.33 462,526.88
TUSD -0.4% 292,927.66 291,647.27
FRAX -1.4% 154,992.10 152,830.21
BUSD -0.5% 130,749.62 130,142.79
GUSD -1.4% 86,354.30 85,154.05
USDP -1.1% 26,871.32 26,580.10
Total $1,148,881.31

Further, the remaining $3,394,125.08 that will be composed of more volatile crypto assets will remain fixed. The price will be determined by TWAP - time weighted average price (average of open, high, low, close) per Messari at UTC+0 on the day the Snapshot vote is made.

Looking at the volatility of ETH over the last week, there is daily implied volatility of 5%. This does not mean that every day ETH will move by 5%, but on average, the general size of the moves will be so big that their standard deviation will be 5%.

Assuming a normal distribution of returns, there is a 68% chance prices move 5% daily, a 95% chance that prices move 10% and 99% chance they are 15%. When looking at the actual daily movements we see an average difference between the daily high and low prices of 6.6%, with a maximum difference of 13.2%. With the exception of BTC, most assets we are requesting have volatility equal to or exceeding ETH.

Given the time delay of at least 1-2 weeks between the end of the Snapshot and execution of the AIP, we are asking for a flat 10% discount on the market value of non-stable crypto assets to account for this extreme market volatility. This accounts for expected daily volatility of the assets and the time delay between asset pricing and any hedge execution we need to make.

Any difference between the aforementioned $3,394,125.08 value and the TWAP value at the close of the Snapshot will be made up for with additional AAVE tokens which will not be subject to a lock if the price of the assets has reduced. If the volatile assets are worth more than $3,394,125.08 after the discount at the conclusion of the Snapshot vote, then the amount of USDC et al will be lowered proportionally. This is to ensure the amount of stable funding requested from the DAO remains fixed.

A detailed breakdown of the requested assets with the 10% discount outlined can be found below:

Token Volatility Discount Tokens Requested Current Price Value w/ Discount
WMATIC 10% 850,000.00 0.80 612,000.00
WAVAX 10% 29,000.00 22.60 589,860.00
CRV 10% 509,732.68 1.10 504,635.36
WETH 10% 350.00 1,597.00 503,055.00
WBTC 10% 23.62 21,300.00 452,817.23
SNX 10% 96,251.92 3.00 259,880.19
RAI 10% 66,094.61 2.92 173,535.14
MANA 10% 103,234.63 0.82 76,558.80
LINK 10% 12,053.48 7.01 76,045.43
YFI 10% 7.08 8,951.00 57,067.95
CVX 10% 5,137.26 5.29 24,458.50
MKR 10% 30.36 835.00 22,812.38
KNC 10% 12,031.49 1.85 20,032.43
UNI 10% 1,685.66 6.99 10,604.50
ENJ 10% 7,242.48 0.55 3,585.03
xSUSHI 10% 2,331.22 1.58 3,314.99
BAT 10% 6,395.16 0.36 2,072.03
REN 10% 15,300.17 0.13 1,790.12
Total $3,394,125.08

This compensation model aims to reduce the burden on the DAO’s stablecoin reserves by diversifying the requested compensation to include other assets from the DAO treasury.

As part of this retro funding proposal, we gave great consideration to the continued economic health of the DAO and the variety of tokens requested.

With these amendments, this ARC will go to Snapshot for vote by the DAO.


To conclude, this proposal outlines a request for the Aave DAO to provide feedback and validation for granting Aave Companies funding for the creation of Aave V3.

Aave V3 is a protocol that emphasizes capital efficiency, security, and risk management. It is a reflection of both the current and future success of the community.

Want To Learn More?

The following links outline further information on retroactive funding, V3, what it took to make, and the potential it brings:

· Optimism’s inspiring article on retroactive public goods funding in collaboration with Vitalik
· Vitalik Buterin and Karl Floersch discussing retroactive public goods funding on this into the Bytecode podcast episode
· This video from The Defiant going through V3’s features
· This great presentation on V3 by David Racero and Miguel Martinez at EthGlobal
· The V3 overview from the Aave developer docs
· The V3 technical whitepaper


Im supporting this proposal 100%. Retroactive funding is the best way to give DAO contributor something back. While others take money before they even start (looking at some Sushi proposals) Aave companies want to be funded months after v3 went live, after seeing the success it has brought with it.
Also i like the transparency this proposal brings with.
Everything is there, the amount, the timelock for the aave tokens and so on.
Plus you can do some quick math if you think this sum is way too high for a period of probably 15 monts work. Just take the 15m (minus audits) and divide them with 100 (number of employees estimated).
Also take into account that the aave tokens are locked for one year. Just think where the market could be then.

So overall i am happy to support this proposal and that i was even involved in the process of reviewing it and sharing my opinion. Thats how you involve the community.

Just one question, will this be something you will be doing in the future again? Or will there be for example some direct revenue stream to the Aave companies?

TL,DR: GL & HF to the Aave companies i will vote YAE/YES


Thanks for the comment, and your support EzR3aL!

We went with retroactive funding, rather than paying for general operational costs in advance, because we want to ensure the DAO is paying for specific, requested projects which deliver substantial and important value and which the community believes push the ecosystem forward.

Just as we did with the development of V3, we signaled to the DAO in our GHO proposal that retroactive funding may be requested but there is nothing set in stone yet – this will be based on community reception and benefit to the ecosystem.

At the present time, there is no request for a direct revenue stream relating to V3, or, currently, for other projects.


Excited to see this hit the forum.

$15mm feels fair as well as the structure - retroactive funding rewards work that has been done. The development of V3 for Aave is paramount and should be compensated for this effort.

I am particularly grateful for the audits - it restores trust within users and shows a commitment toward security within the DAO; expensive but necessary.

This model of multiple organizations servicing the DAO is compelling and sets the standard for the rest of the industry; development, security & risk, all working asynchronously.

I too would echo @EzR3aL’s comments and appreciation for running it by community members and governance participants first. It creates a feeling of trust and fairness in the proposal

It is best to reward those who are doing the work - Aave Companies is the epitome of that. Supportive and excited to see this proposal progress.


Has Aave DAO provided compensation/funding to Aave Companies in the past? If so, can you list the timing & amounts of those distributions?


This is a good step. Aave companies are only one of the contributors to the Aave protocol but they have made significant contributions and brought a lot of quality talent from within the team as well as from the ecosystem e.g. auditors and gauntlet in particular. 15m is a reasonable and fair assessment of the costs for contributions to Aave protocol v3 which is now a public commons for liquidity across the evm chains.
This model of multiple organizations servicing the DAO is compelling and sets the standard for the rest of the industry; development, security & risk, all working asynchronously.

I also think the Aave team has continued to lead in terms of the decentralization playbook and this proposal is yet another example of contributors being correctly incentivised to build commons in web3.


@AaveLabs The Proposal makes sense. I suggest to amend the lockup period

from: “the AAVE tokens received will be locked via smart contact for one year after being converted to stkAAVE to contribute to the protocol safety module, helping to reduce risk for the protocol. Following the one-year lock, Aave Companies would be free to use the tokens as we see fit.”

to: “Following the one-year lock, Aave Companies would be free to use 50% of the tokens and remaining 50% tokens after a two-year lock.”

I believe a balanced approach is to have a cliff of 1 and 2 years and AAVE will be earning interest on the locked stkAAVE in addition to providing backstop to the protocol. This will also add significantly community confidence in the team because the team will have skin in the game for 2 years rather than 1 year.


The community will benefit from knowing how many full time resources are engaged on AAVE V3 in engineering and non-engineering roles respectively.


Fully supportive of this proposal. Nice to see a focus on deploying v3 first and accumulating more treasury assets from protocol usage.


Been interacting first hand with Aave Companies since I started contributing to DeFi and can definitely see the amount of work being done while always keeping a professional approach at every corner.

Aave v3 & GHO are massive improvements and making sure things keep on flowing within all the different working group & Pods via this retroactive funding seems more than appropriate.

Massive props to all the contributors :ghost:


Disclaimer: I was part of the Aave companies in the past, during the development of Aave v3, but this is my opinion purely as a community member, co-founder of an independent initiative (Bored Ghosts), and AAVE holder.

First, I support the proposal in its general terms. I think the amount requested is within what I consider fair given the development done, together will all the activities around it. I am a firm believer that the decentralized nature of DAOs like Aave should not be a disruptive element for fair compensation to work done supporting them somehow. Even more, given the early times of these types of contributions, the uncertainty of the business model, and all risks associated, decentralized communities should be flexible enough in terms of budget, always within limits and without compromising self-integrity.
Agree that the ~$16m can be considered an appropriate amount.

Support given, I would like to point out some aspects on which I don’t fully agree or I think can be improved/taken into account for the final proposal:

  1. External security procedures are a clear and clean cost of developing any type of protocol like Aave v3. So fully agree that the full amount should be compensated to the entity who assumed the cost, in this case, the Aave companies.
    At the same time, given that this doesn’t have any subjective component, I think the community should receive full transparency with some kind of receipts of the exact amounts paid and confirmation of its validity from the different auditors. I think it is also fair to try to keep privacy in what is related to the Aave companies, so a simple disclosure of paid amounts plus a confirmation statement by each security firm is enough in my opinion.
    Also agree with the model of receiving the whole audit cost amount at once, whatever it is.

  2. I don’t really have an important stand regarding the stkAAVE compensation component. In my opinion, the model can simply be common with other components (stablecoins), without any vesting or similar. AAVE (also in its stkAAVE shape) is just governance power, how the Aave companies decide to use/dispose of it, should be up to them, and if the approach is a clear an aggressive selling or any other measure of the kind, it will speak by itself given the context on which it is received.

  3. Regarding numbers presented and percentages of the treasury, are those adjusted taken into account ongoing stream payments and allowances? My feeling is that is not the case, given that there are in the order of ~$10m in stables in pending streams/allowance for Certora, BGD, SigmaP or even Aave grants DAO, depending if any claims have been made.

  4. Related to the previous point and regarding the form of compensation in stable-coins, the community has approved engagements on which there is always a % upfront, plus a streaming component. Even entities more dependent on the Aave DAO like Aave grants DAO had assumed a model based on allowance. This is done to respect the sustainability of the Aave ecosystem, allowing the DAO to still partially collect the outcome of the non-claimed amount of the stream/allowance.
    Given the general approach of the community on all other proposals, I suggest changing both the stablecoins and AAVE compensation to a model of % upfront + streaming that both reduces the current impact on the ecosystem collectors (if point 3 would apply, we are talking to an important part of the current holdings, on stables). It would be a good gesture from the Aave companies, given that the Aave community also participated in pre-funding them back in 2017.

  5. Last, but probably the most important point. I have a pretty strong stand against this kind of model of retroactive funding.
    It is true that there are clearly valid points in Vitalik’s analysis on how a component of retro-active funding is important for decentralized communities. That being said, I would not say this is the same case as, for example, the Optimism one linked. Let me explain why.
    It is clear that any development project, especially software and especially blockchain software has a really really big uncertainty component. It is a say that things in DeFi change every week. But it is quite possible to moderately estimate it in advance, obviously taking into account the “openness” of the scope, potential timelines required product-wise, etc. Just similar techniques as any other project/product plan.
    At the same time, in some cases (for example on Aave v3), there is value in not having complete disclosure of all the “low level” features and characteristics of the protocol to-be-made, in a pre-funding stage from the DAO. Aave doesn’t live alone on DeFi, so it is better for the community itself if a protocol like Aave v3 only shows its strengths once it is relatively ready.
    The previous point creates some kind of conflict, which I really believe should be one of the challenges to solve with high priority by the Aave community: pre-funding + keeping at least partially private what is gonna be funded and produced.
    On this current model and proposal, it is not fair for a community, same as it would not be with any other group, to after work is done, appear and say “we did this completely by ourselves, we request this amount, which is fair for us”. I’m not saying that in a lot of cases (like this proposal) the resultant product (Aave v3) or the amount requested (~$16m) is not legit, I’m saying that the procedure is simply unfair for the community.
    So from my perspective, only the reputation of the Aave companies, and in this case, the clear outcome of the product allows for this kind of proposal to have full support.
    The procedure of full retroactive funding must be changed because if not, no decentralized community like Aave will be sustainable in any sense.

In summary, I support this proposal and the amounts requested, but probably some changes to the payment schedule sound fair and could benefit the community.
Also, I will personally not support any further initiative without a “pre” (and maybe “post”) component, as I think it is not completely fair to Aave.


I’m in support for this proposal!

While there might be some controversy on whether retroactive funding is a good model per se (@eboado raises some valid points above), it’s undeniable that @AaveLabs has added enormous value with Aave v3.

The amount being requested is totally fair and industry standard, given the amount of resources and audits involved.

Speaking for myself and Balancer Labs, we are looking forward to a continuous and sustainable model for building DeFi together, which this proposal supports.


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.


Thankyou very much for your question!

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

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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.


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.


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

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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 @AaveLabs and all contributors for their continuous efforts to improve DeFi.

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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.

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