Summary
This proposal funds the GHO Safety Spoke — an automated position defense system that uses GHO credit delegation to rescue Aave borrowers before liquidation occurs. It is designed from the ground up as a native V4 Spoke that draws directly from the V4 Liquidity Hub, meaning every rescue is a GHO issuance event that generates direct interest revenue for the DAO treasury — this proposal does not ask the DAO to spend money on safety, it builds infrastructure that makes the DAO money while providing it.
The Spoke operates as a fully independent fail-safe layer that activates within the risk parameters already set by the Risk Stewards, complementing existing infrastructure without modifying, overriding, or competing with any of it.
The Problem
On March 10, 2026, a technical misalignment triggered $27 million in wstETH liquidations. the DAO was forced to intervene and vote on a manual reimbursement for 34 users liquidated. While the reimbursement was the right call, a model that relies on manual governance votes to fix protocol-level events is not sustainable.
Every reimbursement vote carries a governance cost, a reputational cost, and a user retention risk that compounds over time.
When health factors drop — whether from genuine market moves or from parameter misalignment — Aave has no native mechanism to intervene before liquidation. The system watches, then punishes.
The GHO Safety Spoke automates the prevention, so the DAO never needs to vote on the cure. This is not a criticism of existing infrastructure, but the introduction of a missing layer—one that makes the protocol more resilient regardless of what triggers the volatility
How It Works
Borrowers opt in at position creation — not during crisis. When a borrower’s health factor drops below their configured threshold (default: 1.1), the system automatically:
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Draws a GHO credit line from a pre-authorized delegation pool
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Repays the minimum debt required to restore the health factor above the danger zone
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Records the GHO obligation onchain as a structured repayment agreement
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Notifies the borrower with full transparency on what happened and what they owe
No liquidation. No penalty fee. No loss of collateral. A temporary GHO credit line does what a liquidator would have done — but for the borrower, not against them.
Why GHO Is the Right Asset
Using GHO as the intervention mechanism is not incidental — it is the strategic core:
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Every GHO credit line drawn generates direct interest revenue for the DAO treasury
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It creates a new utility for GHO beyond simple borrowing — GHO as emergency liquidity
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It gives institutional delegators a yield-generating use case for otherwise idle capital
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It directly advances the goal of routing product revenue to AAVE holders
Every position rescued by the Safety Spoke is a GHO issuance event that benefits the DAO economically. This proposal does not ask the DAO to spend money on safety. It builds infrastructure that makes the DAO money while providing safety.
Why This Is a V4 Spoke, Not a V3 Patch
Aave V4’s Hub and Spoke architecture is designed for specialized credit logic that draws on unified Hub liquidity without fragmenting it. The GHO Safety Spoke is designed from the ground up as a first-class V4 Spoke:
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Introduces a new GHO credit use case without modifying core contracts
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Modular — any future V4 Spoke can read a borrower’s safety and delegation history
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Positions the DAO with a complete institutional-grade safety stack when V4 launches
We will deliver a working V3 implementation on mainnet within the grant period. The V4 architecture is designed in from day one — migration requires no rebuild, only deployment.
Relationship to Existing Risk Infrastructure
The GHO Safety Spoke operates entirely within the risk parameters set by the Risk Stewards. It does not modify, override, or compete with any existing risk management layer.
Think of it as a secondary circuit. The Risk Stewards define the thresholds. The Safety Spoke activates only when a position crosses into the danger zone those thresholds define. We are building below that layer, not around it.
The Safety Spoke reduces the operational surface area that risk managers need to monitor manually — it does not replace their judgment.
How This Differs From DeFi Saver
DeFi Saver’s Automation product protects positions using the borrower’s own assets. It requires the borrower to have spare collateral or liquidity available to execute the rescue. If the borrower has no spare capital, DeFi Saver cannot help them.
The GHO Safety Spoke uses delegated credit — meaning borrowers without spare capital can still be rescued by drawing on a shared delegation pool. This serves the exact population most at risk of liquidation: users who are already capital-constrained.
DeFi Saver is also an external tool. The Safety Spoke is a native Aave primitive that generates DAO revenue. These are complementary products, not competing ones.
Why This Is Aave-Exclusive
This product is architecturally impossible to replicate on Morpho or Euler:
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Requires Aave’s approveDelegation() on debt tokens — Aave-specific
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Uses GHO as the intervention asset — Aave-issued
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Designed around V4 Spoke architecture — Aave’s roadmap
Every rescue, every GHO credit line, every delegation relationship happens on Aave and only on Aave. There is no version of this product that benefits a competitor.
The Four Components
1. Health Factor Monitor Non-custodial onchain monitoring of borrower positions. User-configurable thresholds. Triggers at health factor defined by borrower at opt-in. Decentralized and permissionless — no keeper centralization.
2. GHO Delegation Pool Structured pool where delegators commit GHO borrowing capacity specifically for safety interventions. Delegators earn yield on drawn credit lines. Borrowers pay a 0.5% intervention fee. Pool is permissioned — borrowers opt in at position creation, not during crisis.
3. Rescue Executor Smart contract executing the minimum repayment required to restore health factor. Draws from delegation pool, repays debt, records GHO obligation onchain. Fully transparent and auditable. Operates within Risk Steward parameters at all times.
4. Borrower & Delegator Dashboard Complete interface for both sides. Borrowers see health factor, safety configuration, and intervention history. Delegators see active delegations, utilization rates, yield earned, and exposure. One-click opt-in and opt-out for both parties.
Milestones
M1 — Week 3 | $3000 Health factor monitor and GHO delegation pool contracts deployed on testnet. Borrower opt-in flow complete. Public GitHub repo live with full technical specification.
KPIs: Contracts on testnet. Repo public. Opt-in flow functional end-to-end.
M2 — Week 6 | $5500 Rescue executor live on testnet. Three intervention scenarios simulated and documented onchain: oracle pricing event, genuine market drop, gradual health factor decline. Delegator dashboard complete. Security review initiated.
KPIs: Three scenarios documented onchain. Delegator dashboard functional. Security review underway.
M3 — Week 10 | $6500 Mainnet launch. Ten active safety delegations live. First intervention executed or simulated on mainnet. Analytics dashboard showing health factor distributions, intervention history, GHO volume generated, and delegator yield — all onchain verifiable.
KPIs: Ten active delegations. $50k+ in delegated GHO credit capacity. First intervention recorded onchain.
Success Metrics — 90 Days Post Launch
All metrics onchain verifiable. No self-reporting required.
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100+ borrower positions enrolled in safety protection
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$500k+ in GHO credit capacity delegated into the safety pool
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GHO interest revenue generated and attributable to the Spoke
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Zero new protocol-level custody risk introduced
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One successful intervention executed on mainnet
| Item | Amount |
|---|---|
| Smart contract development and testing | $10,500 |
| Frontend dashboard — borrower and delegator | $2,500 |
| Security review preparation and documentation | $1,000 |
| Community launch and integration support | $1,000 |
| Total | $15,000 |
About Build Union
Build Union is an independent development collective with full-stack coverage across Solidity, frontend development, product design, and DeFi research.
Lead Product Specialist — E.Eclipse
https://www.linkedin.com/in/emmanueleclipsewebsite/
E.Eclipse has a track record of building and shipping infrastructure for some of the most capital-intensive protocols in the ecosystem. As the product lead behind CrowdNode on Dash a platform that reached $500M in TVL and currently building The Shield for Polkadot across a $2B TVL environment, the team brings direct experience designing systems where user funds and protocol security are non-negotiable. Additional work includes a multichain administrative platform for Nervos network participation.
Closing
The DAO voted to reimburse 34 users after March 10. That vote cost governance bandwidth, community trust, and delegate attention. The GHO Safety Spoke is the infrastructure that converts that reactive vote into an automated, revenue-generating event that never needs DAO intervention at all.
Independent teams building native primitives that generate DAO revenue are exactly what a healthy, decentralized Aave ecosystem looks like. This is what that looks like in practice.