ARC: Add support for sAVAX (BENQI Liquid Staking AVAX Token) on AAVE v3

ARC: Add support for sAVAX (BENQI Liquid Staked AVAX)



The community would like to ask for your support in listing sAVAX as a collateral asset. sAVAX is the Liquid Staking token from BENQI protocol.


sAVAX is a Liquid Staking token that allows a user to unlock liquidity while participating in securing the Avalanche network. As sAVAX constantly increases in value from network validation reward, listing sAVAX would allow users to unlock liquidity as a collateral for loans and in turn generate revenue to AAVE. Revenue in the form of sAVAX will always grow from the said network validation reward.

sAVAX is the largest Liquid Staking token on Avalanche and has over 2M sAVAX in circulation with deep liquidity in AMMs to support a healthy lending market ecosystem.


  1. What is the link between the author of the AIP and the Asset?
    The author of the AIP is a representative of the BENQI team.

  2. Provide a brief high-level overview of the project and the token
    BENQI Liquid Staking solution that allows a user to stake AVAX to receive sAVAX. AVAX that is staked will then be delegated to nodes to run network validation that generates approx 7.20% APR.

    sAVAX can be redeemed back for AVAX after a 15 days cooldown period in a 2 days redemption window. If unredeemed, the sAVAX will be restaked into the protocol and continue to secure the network, generating reward and can be unstaked again at any time after.

  3. Explain positioning of the token in the AAVE ecosystem. Why would it be a good borrow or collateral asset?
    sAVAX is a yield bearing asset as validation reward is accrued and realised upon redemption for AVAX. Using a yield bearing asset as a collateralised asset would increase the interest earned on supplying and reduce the cost of borrowing.

    As sAVAX has multiple integrations with Anchor, Kyber, Trader Joe, Ribbon, Platypus (TBA) we expect to see sAVAX being borrowed to facilitate some of these use cases for borrowing.

  4. Provide a brief history of the project and the different components: DAO (is it live?), products (are they live?). How did it overcome some of the challenges it faced?

    BENQI started off as the first lending protocol on Avalanche when there were few builders on the network when it first launched in 2020. Identifying a need for a base layer of DeFi primitive, BENQI’s lending protocol was officially launched in 2021.

    As DeFi activity on the Avalanche network grew, it was ripe to support another layer of DeFi primitive, Liquid Staking. With over 270m AVAX ($21 bn) staked in the P-chain (platform chain where validating nodes live), there is a great opportunity for users to participate in securing the network and receiving validation rewards and use sAVAX as collateral on AAVE.

  5. How is the asset currently used?
    There is over 2M AVAX (~ $160M) being staked via BENQI and over $170M of liquidity across AMMs. sAVAX is integrated by protocols such as Anchor, Ribbon Finance, More Money, Trade Joe, Kyber and Pangolin.

  6. Emission schedule
    No emission schedule

  7. Token (& Protocol) permissions (minting) and upgradability. Is there a multisig? What can it do? Who are the signers?
    sAVAX cannot be minted without staking AVAX in the contract. A multisig is currently the owner of the minting contract of BENQI’s core team.

    As delegation requires an EOA, sAVAX’s delegating EOA ownership is in the process of being transitioned to a MPC (multi-party computation) model that decentralizes the process of delegating AVAX to nodes.

  8. Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity)
    Market Cap: $168M
    24hr Volume: $2.2M
    Exchanges: Trader Joe, Kyber, Pangolin

  9. Social channels data (Size of communities, activity on Github)
    Twitter: 62.9k followers
    Telegram: 13.35k followers

  10. Contracts date of deployments, number of transactions, number of holders for tokens
    Date of deployment: 27 January 2022
    Number of transactions: 59902 tx
    Number of holders: 4070 holders

Technical Specifications

sAVAX uses a pool share system in which the token increases in value due to the increasing AVAX balance in the pool. Staked AVAX is withdrawn from the C-chain smart contract and imported into the P-chain for delegation. The withdrawal and delegation process is currently protected in a hardened memory-only runtime environment with no remote access and extremely restricted physical access. AVAX is delegated to reputable validators randomly to ensure reliable performance and validation rewards. When delegations expire, the rewards are added to the pool and redelegated alongside the principal amount to compound rewards.

The architecture is currently transitioning into a distributed, multi-party computational system which ensures that the private key of the off-chain bot is not known to any entity at any time. For transactions to be executed, multiple wardens must be in consensus regarding the transaction validity, and the wardens have to sign the transactions independently using their own keys. Only when all wardens agree and have signed the transactions can the final transaction be constructed for execution.

It is suggested that the AIP only be implemented once the transition is complete.

Proposed Technical Parameters

sAVAX is proposed to start with 50% LTV and a $10m borrow cap in an isolated pool with AVAX and stablecoins USDC and USDt.


I like this proposal, Aave has seen success with stETH/ETH strategies, and I believe that something similar can be done if sAVAX is added.

The success of stETH/ETH has brought new strategic opportunities to light such as stETH/ETH in their own respective E-mode pool. I think it would be beneficial to eventually have an E-mode pool dedicated to sAVAX/AVAX, as well.


I am in favor of this proposal. sAVAX opens the door to much more efficient capital usage. The Benqi team has been tirelessly pursuing this option and has security at top of mind.


sAVAX would be a good companion to stETH and deepen Aave’s support of liquid staking tokens.

These tokens offer users more utility and additional yield, plugging into other protocols across a myriad of chains and networks. You can see this range here:

One of the many benefits of liquid staking is to allow for integrations such as these. I support this addition and a wider scope for the Aave end user.


Hi @Team_BENQI

Cormac here from Index Coop. Great to see this discussion happening. sAVAX being listed on Aave would enable Index Coop to build a leveraged staked AVAX in future.

We launched icETH two weeks ago - a similar product using stETH as the underlying. It has already reached 14M AUM. We would love to repeat this success with the Aave, Benqi and Avalanche teams.


Thanks for this proposal

Would love to understand better the underlying risks of sAVAX , you could use Aave Risk Framework for example Methodology - Risk


Love to see this for the Aave ecosystem!

I definitely agree that there should be a risk assesment involved with any new asset listing.

However, If an asset is deploying in ISO mode, does the v2 Risk Methodology give an accurate risk assessment? The reason I ask is because it is my understanding that ISO mode will mitigate certain risks involved with new asset listings.

(P.S. I would be happy to begin thinking of ways that a new risk methodology could be created for Aave v3 New Asset Listings, that would take ISO mode into account)

That would be great!

I think this methodology that’s been used since Aave v1 is still relevant - would be great to expand and improve it for v3


Title: sAVAX Security and Risk Assessment
Author: BENQI_team
Security and Risk Assessment

The goal of sAVAX (Liquid Staked AVAX) is to enable users to secure the Avalanche network while participating in DeFi. This allows users to mint sAVAX by staking AVAX where other protocols within the network can build on sAVAX.

Smart contract risk - D+

Liquid Staked AVAX token, sAVAX, was launched in February 2022. It is the receipt token that users receive for staking AVAX. sAVAX can be redeemed for AVAX after a 15-day cooldown period in a 2-day redemption window. In the two months after sAVAX was launched, there have been more than 79,000 transactions.

Counterparty Risk - D+

The sAVAX token is currently held in a 4/7 multisig by the team. However, the multisig is expanding to 10 signers that will include non-team members. These non-team members are:

Mark Stanwyck from Avalaunch
TN from Pendle
Marc Zeller from AAVE

To further decentralize the protocol, BENQI is reaching out to more partners and protocols to be part of the multisig.

Minting of sAVAX can only be done by a user staking AVAX within the smart contracts. These contracts have been audited by Halborn and had formal verification by Certora. BENQI is also a partner of Immunefi for bug bounty reporting.

Market Risk - B

As sAVAX is a receipt token for staked AVAX, price action and volatility is highly correlated to AVAX. As sAVAX is integrated across the Avalanche ecosystem with protocols such as Kyber, Platypus, Yeti, Anchor, Trader Joe and Pangolin, sAVAX’s market cap has been increasing alongside the number of holders and transactions.

Liquidity depth on DEXs are deep, with more than $120m in liquidity across the DEXs on Avalanche with $5.5m volume traded today.

  • Platypus - $63m
  • Trader Joe - $39m
  • Kyber - $19m
  • Pangolin - $5m

At the time of writing, Platypus have just released a stableswap for sAVAX-AVAX that is projected to reduce the slippage of sAVAX trades.

Updated Proposed parameters

sAVAX is proposed to start with 50% LTV and a 500,000 sAVAX supply cap. It is also proposed that eMode be enabled with AVAX as the asset is highly correlated.

Normal Parameters:

50% LTV
65% Liquidation threshold
10% Liquidation bonus
10% Reserve factor
500,000 $sAVAX Supply cap
0 $sAVAX Borrow cap

eMode Parameters:

95% LTV
97% Liquidation threshold
2.5% Liquidation bonus
No custom oracle

In eMode, sAVAX is allowed to have a higher LTV for borrowing AVAX as the asset is highly correlated. As supply and borrow cap is enabled, the risk is quantifiable and contained, especially with a cautious LTV to start off with in non eMode.

1 Like

thanks for this,

just an suggested edit for risk parameters :
Normal Parameters:

50% LTV
65% Liquidation threshold
10% Liquidation bonus
10% Reserve factor
500,000 $sAVAX Supply cap
0 $sAVAX Borrow cap

eMode Parameters:

95% LTV
97% Liquidation threshold
2.5% Liquidation bonus (5% would not be enforceable due to 97% liquidation threshold)
No custom oracle

1 Like

thanks for the suggestion. updated the post!

Appreciate the discussion so far. In the meantime we have created a snapshot vote that will go live in approx 24 hours:


Gauntlet is BENQI’s partner for managing market risk and has assisted in initial parameterization of sAVAX’s listing on the BENQI money market on Avalanche. While Gauntlet currently supports Aave v2 on Ethereum, we plan on supporting v3 down the line. Once we have built our simulation model infrastructure to support v3, we look forward to tuning risk parameters to optimize capital efficiency and manage market risk for sAVAX should the community decide to list sAVAX.

As a side note, Gauntlet is currently prioritizing integrating with Aave Arc to drive institutional growth. v3 support will follow afterwards.


As a part of Certora continuous formal verification activity, we have conducted a formal verification of sAVAX token code using our generic ERC20 token specification.
It’s important to note that this is strictly a technical analysis of the smart contract code.

How to look at the dashboard
With Certora technology, we write rules that specify how a smart contract should behave and the tool either proves that the rule always holds or finds a counterexample. It’s impossible to specify general rules for all the ERC20 tokens, since they all have different features. We have chosen to specify a set of strict rules for tokens, for example “supply should always be fixed” and “transfer should always work”. As a result, a token with dynamic supply will obviously fail the fixed supply rule, and a token that has a pause and/or a blacklist function (like USDC) will fail the “transfer should always work”.

In the case of ERC20, the point of these rules is usually to present precise information about the token behavior to the community. This is how we should look at rule failures - usually not as bugs but as information about token features.

Having said that, here is our dashboard with the findings:

Here is the rule failures explanation:

  • NoChangeTotalSupply rule fails because has sAVAX has dynamic supply by design.
  • transferCorrect and transferFromReverts rules fail because the token is pausable and transfers don’t work correctly in a paused state.
  • otherBalanceOnlyGoesUp rule fails because the token contract itself holds a dynamic balance of tokens in cooldown, and some operations like redeem() decrease the contract’s balance by design.

In summary, the sAVAX token code complies with our generic ERC20 specification and all the violations are by design.

Community feedback

Our generic ERC20 verification is a work in progress and we’d love to get your feedback about it. What other technical information would you like to see?