[ARC] - Add support for BADGER on Aave V3

Hi Aave community, I’m Spadaboom a long term contributor to Badger DAO and excited to discuss onboarding BADGER onto Aave v3 with everyone.

Rational

This proposal presents the Aave community with the opportunity to onboard BADGER onto the Aave v3 Ethereum Liquidity Pool.

References

The below list of links provide context in supporting the ARC.

More generally, all Badger related contract addresses can be found here.

Badger has two Chainlink feeds on Ethereum mainnet for USD and ETH, but no price feed on Arbitrum. This proposal intends to utilize the BADGER/USD Chainlink Oracle.

Summary

Badger is a DAO focused on building the products and infrastructure necessary to accelerate the growth of Bitcoin in Decentralized Finance across multiple blockchains. The BADGER token is a non-upgradeable governance token with the added utility of boosting user returns when funds are deposited into the protocol’s Sett Vaults.

Motivation

The BADGER token is already on Euler Finance. By listing BADGER, Aave is positioned to benefit from the first mover advantage by enabling users to deposit BADGER as collateral or borrow BADGER to participate in governance and/or earn boosted returns on Badger Setts.

The BADGER token has been audited and is supported by two Chainlink Oracles. There are several liquidity pools on Decentralized and Centralized Exchanges such as Uniswap v3 and Coinbase.

Audits:

Ethereum Chainlink Oracles:

BADGER/USD - https://data.chain.link/ethereum/mainnet/crypto-usd/badger-usd
BADGER/ETH - https://data.chain.link/ethereum/mainnet/crypto-eth/badger-eth
The main sources of DeFi liquidity are shown below.

Pool Composition Protocol Liquidity ($M)
B-80BADGER-20wBTC Balancer v2 7.67
BADGER/wBTC Uniswap v3 6.10
BADGER/wBTC Curve v2 2.50
BADGER/wBTC Sushiswap 1.06
BADGER/wBTC Uniswap v2 0.79
Badger/FRAXBP Curve v2 0.52
Total Liquidity 18.64

Specifications:

  1. What is the link between the author of the AIP and the Asset?

@Llamaxyz is supporting BadgerDAO in navigating Aave’s governance process, providing necessary proposal power, and writing the v3 payload required to list BADGER on the Ethereum Liquidity Pool. This initiative falls outside of the recently agreed Aave DAO funded work scope between Llama <> Aave DAO and is funded by Badger DAO.

  1. Provide a brief high-level overview of the project and the token

The Badger protocol is a yield optimizer deploying vaults to which users can deposit funds to earn a yield. Badger has released strategies using Yearn Finance, Curve Finance, Convex Finance, Balancer, Aura Finance and Sushiswap. The BADGER token is an ERC20 and was deployed on 28th November 2020 with a total supply of 21,000,000.

  1. Explain positioning of the token in the AAVE ecosystem. Why would it be a good borrow or collateral asset?

An Aave listing would be the first major lending protocol listing for BADGER and Aave would benefit from the first mover advantage. Similar to 1INCH, the BADGER token has added utility. Users can borrow BADGER to participate in governance and Badger’s tokenomics model. Onboarding Badger as collateral on V3 Mainnet would also increase the asset diversity on this market and grow the Reserve Factor.

  1. Provide a brief history of the project and the different components: DAO (is it live?) products (are they live?).

The Badger protocol was launched in December 2020 on Ethereum focusing on creating yield for BTC derivatives. Since then, Badger has launched on Arbitrum (September 2021), and expanded its product offering to to include other types of pools (stables, pegged assets etc). TVL across Ethereum and Arbitrum is $86.4m, of which $84.1m is on Ethereum and $2.3m on Arbitrum. Badger is also live on Polygon and Fantom, but has less than $10k TVL on these networks.

  1. How is the asset currently used?

The BADGER token is primarily used for DAO’s governance coordination via Snapshot and also provides boosted rewards to users who deposit in Sett Vaults.

With the introduction of the boost model, users who deposit funds in Badger Setts receive boosted rewards based upon their share of native and non-native assets on the protocol. The higher the ratio of the native balance (like BADGER or a DIGG LP) compared to non-native balance ( funds deposited into BTC vaults), the higher the BADGER token rewards you receive on your non-native vault positions. The boost formula is the following: :

Stake Ratio = [$ value of BADGER balance + $ value of DIGG balance] / [$ Value of non-native staked Sett positions].

Note: Not all non-native assets positions can be boosted. The current boosted vaults are cvxCRV and ibBTC/crvsBTC.

  1. Emission schedule

The BADGER token is a MiniMe token with balance checkpoint functionality (balances can be checked on-chain for any given block. Minting and burning is managed via the [controller contract](https://etherscan.io/address/0xddb2dfad74f64f14bb1a1cbab9c03bc0eed74493#code). The owner (Badger governance multisig), can mint and burn tokens to its own address.

  1. Token (& Protocol) permissions (minting) and upgradability. Is there a multisig? What can it do? Who are the signers?

The token contract is not upgradable. The controller contract is upgradeable via Badger governance, using a two day timelock. It allows the owner to transfer ownership, and permanently disable minting / burning functionality.

There are several Badger multi-sigs:

  • Dev Multisig (dev.badgerdao.eth)

  • Main multisig which has governance/admin rights. It’s the controller contract owner and can set parameters on vaults and strategies, queue/execute timelocks, and implement votes by Badger holders. This multisig holds a relatively small amount of funds (~$125k).

This multisig is secured by 3/5 anonymous signers who are proven contributors. The track record of this multisig shows commitment to the DAO with years of operation, with 98 BIPs executed upon snapshot approval. This commitment is especially strong in crisis situations, leading to proposals like BIP-76 to upgrade the contracts, BIP-77 to reactivate smart contracts and recover funds, and BIP-78 to return recoverable tokens, following the Badger hack last year.

  • TechOps Multisig (techops.badgerdao.eth)

  • Controller for the DAO. This multisig can call internal system functions such as sweepRewardToken(reward token address) every two weeks on the bveCVX strategy. This call is executed atomically along with the usual call of claimBribeFromVotium(). As the name suggests, the sweeping function will transfer all rewards (cvxFXS for instance) into the hardcoded BribesProcessor. It can also set emission schedules.

This multisig is secured by 3/7 anonymous signers (members of the internal technical team).

  • Treasury Vault Multisig (treasuryvault.badgerdao.eth)

  • This multisig is for the treasury’s long-term holdings: Bitcoin, Ether (gas), POL, farming positions, and uncirculating BADGER. It holds the largest part of Badger treasury ($31.7m+), including $9.4m worth of Badger/WBTC liquidity, so 50% of the total liquidity as protocol owned liquidity.

This multisig is secured by 5/13 signers including the signers voted on BIP-89 and part of dev multisig signers.

  • Treasury Ops Multisig (treasuryops.badgerdao.eth)

  • This multisig is used for short-term treasury holdings and is the beneficiary of the DAO’s fees and the treasury’s yield. This multisig processes incoming tokens into long-term holdings for the treasury vault. It holds part of the Badger DAO treasury (~$900k).

This multisig is secured by 3/8 signers (members of the internal technical team).

  • Treasury Voter Multisig (treasuryvoter.badgerdao.eth)

  • This multisig executes the Convex voting weight allocated to the treasury as per BIP 87. It holds bveCVX and vlAURA.

This multisig is secured by 5/13 anonymous signers (members of the internal technical team).

  • Payment Multisig

  • This multisig is used to execute financial transactions, such as payments to contractors, contributors, expenses, bounties, advisors, etc. It holds $2.8m, including $1.8m of Badger (2.5% of supply).

This multisig is secured by 3/7 anonymous signers (members of the internal technical team).

  • ibbtc Multisig (ibbtc.badgerdao.eth)

  • This multisig is an internal wallet which claims yield on behalf of the ibBTC contract, only to redistribute it again as emissions. It currently holds $310k of funds.

This multisig is secured by 3/6 anonymous signers (members of the internal technical team). .

More information about the Badger multisigs can be found here and here.

  1. Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity)
  • Market Cap: $56.7 circulating
  • Fully Diluted Valuation: $75.19m
  • 24h Volume: $2.55m (from Coingecko)
  • Volatility: Low
  • Maturity: Medium
  • Centralized Exchange Listings: Binance, Coinbase, Crypto.com, FTX, Kucoin, Kraken, and Huobi, plus others.

Souurce: Badger DAO Price in USD: BADGER Live Price Chart & News | CoinGecko

  1. Social channels data (Size of communities, activity on Github)
  1. Contracts date of deployments, number of transactions, number of holders for tokens

On mainnet:

  • Date of deployment: December 3rd, 2020
  • Number of transactions: 174,224 transactions and 524,669 transfers
  • Number of holders for token: 30,768

On Arbitrum:

  • Date of deployment: September 2021
  • Number of transactions: 1,454 transactions and 11,122 transfers
  • Number of holders for token: 815
8 Likes

In total support for Badger and its listing on AAVE.

Very happy to seeing this happening.

3 Likes

Excited to see Badger on Aave

4 Likes

Thank you for the application but just curious, if onboarded, is the team planning to use Aave itself with the team’s Badger token treasury potentially? To help with initial liquidity

3 Likes

Llama is supportive of this proposal. BADGER is an excellent candidate for Aave V3 given its liquidity profile and Badger’s proven community. Llama will work with BadgerDAO to bring the proposal through the Aave governance process including writing and deploying the necessary payload. We will also explore other opportunities between Aave and BadgerDAO.

5 Likes

Hi @spadaboom - thanks for bringing this to the forum. I am grateful for your project as it was one of my first foyers into DeFi :sweat_smile:

@Llamaxyz I am surprised by your haste support here. While V3 leads to new possibilities with new assets, it feels like the classification of excellent liquidity is generous:

And $2.5mm in volume…

This feels very similar to assets that were just trimmed and limited by Gauntlet.

Looking at the risk qualification criteria, for me the value is in the age / maturity of Badger, history of transactions, and amount of holders. This leads to new users for Aave.

I am happy to support it but would caution against not using any scrutiny.

There is a difference between an asset with demand and an asset that feels like another D2D partnership - especially one that was hacked and lost the trust of its community.

1 Like

Thanks, @spadaboom for the proposal. Gauntlet will analyze this listing from a market risk perspective.

As for Aave’s initial V3 ETH launch, we recommend that V3 ETH initially include primarily assets that have been listed on Aave V2 ETH (wstETH may be an exception).

1 Like

Hey Doo,

That would would be the intention yes. For recent BADGER token integrations the treasury team has deployed capital as part of seeding initial liquidity when those integrations launched.

Examples;

  • Badger/wbtc pool Balancer
  • Badger/FRAXBP Curve
  • BADGER Euler Market - Not on the below debank link but 100k BADGER deployed

Overview of treasury positions and those deployments DeBank | Your DeFi wallet

1 Like

Thanks for your support and Badger is excited to explore new opportunities beyond this initial first step.

1 Like

Glad to see a fellow early Badger!

Appreciate your support and pragmatic approach to risk management and agree on the potential for new users coming to Aave. Numerous community members have expressed interest in have Badger available on Aave.

One thing I’ll point out on demand is with Badger’s extensive offchain and onchain liquidity hubs, when markets pick up Badger volume picks up significantly which can be seen with multiple $100M+ volume days. Even as recent as early this month there was a $15M+ volume day as well.

Let me know if there are any additional questions or comments

BADGER is an excellent candidate for Aave V3

To clarify this, we look forward to sharing the risk assessment which will include protections such as a low SupplyCap and BorrowCap. Assets like BADGER are an opportunity to leverage V3 features to onboard new assets to the protocol while prioritizing safety. See comments in this thread related to Aave V3 reducing the risks presented by the type of looped liquidity attack alluded to.

4 Likes

Thanks for the reply, but can you give a range for the AAVE community to make a more informed decision? It will be a good way to build a good will.

I can’t give an exact number as that would be up to the treasury council via a 5/9 approved vote but I can’t imagine the amount being lower then what was deployed to Euler already (100k Badger tokens) and I can see them being interested in deploying more to kickstart the integration with Aave being a much larger protocol.

2 Likes

Would love to see BADGER listed in AAVE v3…

2 Likes