[ARC] Purchase veBAL from Tribe DAO


title: [ARC] Purchase veBAL from Tribe DAO
status: Discussion
Author: @MatthewGraham (unaffiliated)
created: 27-08-2022


Simple Summary

Tribe DAO is currently seeking to liquidate several holdings and the Aave community has the opportunity to submit a bid for the veBAL holding. This forum post is to discuss if the community shall submit a bid.

Abstract

Tribe DAO is dissolving the DAO’s assets and is asking for public bids on the governance forum. Depending on the response in the comments here, Aave can submit a bid via a forum post on the Tribe DAO Governance forum to purchase the veBAL holding. Tribe DAO has requested bids be published on the forum, with the best bid to be presented on Snapshot for voting on Tuesday, 30th August.

Aave DAO has an opportunity to purchase 112,041 units of B-80BAL-20WETH that has been locked as veBAL with an expiry date 25 May 2023.

Motivation

There is an opportunity to purchase 112,041 of the 7,386,601 B-80BAL-20WETH units locked in the veBAL contract, 1.52% of veBAL supply, from Tribe DAO. This position is likely to be sold at a discount to book value due to how the non transferable holding is to be managed.

A successful purchase enables the recipient to take control of the wallet containing the veBAL holding. The veBAL is non-transferable and therefore can not be transferred to the Ethereum Reserve Factor where the current BAL holding is held. It is likely this veBAL holding will need to be managed separately which could lead to under utilisation of the boost. The boost can be sold on secondary markets when they emerge which is expected to be soon or additional funds can be deployed from the wallet holding the veBAL to attain the boost.

The opportunity is for Aave DAO to acquire a large veBAL holding at a discount to book value will strengthen an already strong position within the Balancer ecosystem. Acquiring veBAL ahead of the GHO launch and the deployment of many bb-a- linear pools, will enable Aave to direct more BAL incentives towards pools that drive TVL. This acquisition of veBAL along with the existing BAL tokenswap deposited into veBAL will cement Aave within the top holders of veBAL and provide the community with more flexibility for how to deploy the 100k BAL stil to be purchased on market.

Specification

A forum post will be shared on the Tribe DAO governance forum presenting a price, that if successful, will be presented for vote on both DAOs Snapshots starting 30th August 2022.

Pending two successful DAO Snapshot votes, each community will proceed with an on-chain vote enabling the funds/controls to be exchanged.

A high level overview for how control of the veBAL holding will be passed from Tribe DAO to Aave DAO is presented below:

  • Fei Lab / Tribe DAO devs will deploy a new contract
  • OTC buyer will be the pending owner of the contract
  • The contract will allow to vote for gauge weights, delegate the voting power on Snapshot and extend the lock period to offset the voting power decay
  • BAL and bb-a-USD protocol fees can also be claimed through this contract
  • OTC buyer can accept ownership of the contract by approving the OTC tokens on the contract and calling claimOwnership(), which will send the tokens to the Tribe DAO

Upon acquiring the veBAL holding, the Aave DAO has the ability to extend the lock position or await the expiry to redeem the B-80BAL-20WETH on the 25 May 2023. How the DAO utilises the veBAL holding can be discussed in a separate proposal with consideration to the broader Balancer strategy to DAO is to adopt.

The veBAL position currently earns BAL and bb-a-USD protocol fees which can be claimed over time.

Next Steps

Discuss in the comments if Aave should pursue submitting a bid for the veBAL assets and if there is support, a bid will be submitted.

If the Aave DAO is successful, the Aave community will hold a Snapshot vote to determine if the DAO should purchase the veBAL holding from Tribe DAO.

If both Aave DAOs and Tribe DAOs Snapshots yield favourable outcomes, a payload will be delivered to @bgdlabs for peer review and then an AIP will be submitted enabling the transfer for funds in exchange for control of the veBAL holding.

Copyright

Copyright and related rights waived via CC0.

6 Likes

Really interesting proposal here and we commend the forward thinking!:slight_smile: This reminds us of a somewhat similar situation in that of Dragonfly’s deal with LDO that passed almost a month ago, as the terms of the VeBAL can be somewhat synonymous to the vested LDO, plus the boosted rewards.

For us, the deal with LDO was quite surprising as it seemed the terms of the deal didn’t heavily discount the LDO price when sold in bulk to the VC: Lido Finance floats second proposal to sell LDO to Dragonfly Capital

As for this situation, we think this is something that we should definitely discuss, and further deepens our BAL partnership/relationship. We do think that the Aave Dao can get a pretty good discount and should only seriously consider this with a serious discount to market prices, given the specific distressed situation Tribe is in.

Note: We are not delegates for Balancer (yet :blush:) or Tribe

1 Like

Purchasing veBAL with market discount would be really beneficial for both Aave DAO and Balancer, but I have some questions about the wallet that holds veBAL.

  • Could you link the address that holds veBAL?
  • Is an EOA address or smart contract?
  • How can the Aave DAO trust that the address will not be compromised after the swap?

If the address that hold veBAL is an EOA or is behind Tribe governance or is behind a multisig owned by Tribe, them there is a higher risk of losing the control over the veBAL, and such risk should be addressed by discarding the offer or offering bigger discounts.

1 Like

I would only recommend buying the veBAL if there is a heavy discount on these token. We are still in a phase where the market could see some big price movements downwards. So in the end it could be easier and safer to market buy these token.
I would also like to see a link to the TribeDAO governance forum, in order to see what other protocols may be offering? This way we could pretty easy see what other DAOs are offering.
And i would also like to see @kartojal questions being answered.

  • Who will control the address if the veBAL will be purchased? There needs to be a detailed post on this.
  • What are the current fees that can be claimed?
  • How would the Aave DAO buy these veBAL? With stablecoins (which i would prefer)?
1 Like

Hi @kartojal, @EzR3aL,

Great questions.

The veBAL holding is held by a Smart Contract. The specification section of the proposal above includes about as much information I have at this point in time.

I am of the opinion that @bgdlabs taking a look at this from a security perspective would be ideal. I am not the right person to verify the security aspects, but I can relay on what I am told. :slight_smile:

If the DAO can not directly take control of the contract via governance, I would suggest the guardian multi-sig be used.

Tribe’s proposal on Balancer’s governance forum requesting an address be whitelisted to enable the B-80BAL-20WETH token to be deposited into the voter escrow contract.

Further progression to consider. Olympus DAO is considering an offer near fair market price which may mean a lesser discount than we would like to see here.

https://snapshot.org/#/olympusdao.eth/proposal/0x16aac6c181fd1ecdabe46d573725bbc60b02ec79a16e209f0df4a9d088e2168f

This is somewhat dependent on Tribe DAO. I believe DAI or stETH may be suitable, but this detail will need to be verified.

I think the next steps here would be to make an offer with a clause regarding security aspects and then progress through Aave’s governance process as per usual. This will give us time to continue the discussion and perform all relevant due diligence.

1 Like

Further to the above, there is also a vlAURA holding that is available for purchase. I propose this holding be included in any offer made to Tribe DAO to acquire veBAL.

Holding size:
34038.420626218725374201 AURA

Value:
$108,922.9460038999 using 29/08 CoinGecko closing price.

The contract address:

with parameter: 0xc44902C03093D52213d20E5b06a0Bda4D9Ce6524

The voter lock period finishes:
23,438 AURA unlock on Nov 3
10,600 AURA unlock on Nov 17

Ease of transfer:
vlAURA can be transferred by just giving the proxy admin to whoever buys the tokens. The vlAURA can be redeemed on 3rd November and 17th November 2022, and then transferred the Aave Ethereum Reserve Factor.

1 Like

Interesting, i havent heard of Aura Finance yet, but it seems like this could be a great addition too. Also this could bootstrap liquidity pools for GHO in the future.

1 Like

We support this ARC to purchase veBAL at a discount! As stated above, acquiring a large veBAL will strengthen our position in the Balancer ecosystem. Since the beginning, Aave’s infrastructure was built on top of Balancer, such as the 80%AAVE/20% ETH liquidity pool used on the safety module.

In the upcoming launch of GHO, stacking veBAL will give Aave the power to direct the BAL emissions to desired pools, increasing the synergies between Aave and Balancer. What we suggest to discuss further is, if Aave wants to place a bid, to what extent (discount to book-value) can we accept?

For the final holder of veBAL, as answered by @MatthewGraham , we support the idea of giving the power to the guardian multi-sig if the DAO can not directly control the contract.

Lastly, for bidding vlAURA, we suggest creating another ARC so we can discuss more on the advantages & disadvantages, motivations and specifications.

Hi everyone :wave:

Bids are due Wednesday by 4pm PT.

If a bid is made on the forum and it progresses to Tribe DAO Snapshot, then one Snapshot for each asset purchase will be creates for the Aave community to vote on. Then an AIP will be prepared in line with the normal governance process.

We can do separate Snapshot for each asset, but I don’t think there is time for a separate ARC discussion period of 5 days just now.

3 Likes

Hello,

Balancer is a very strategic future center of gravity for both upcoming upgrades of the safety module & GHO liquidity.

An opportunity to acquire voting power to incentive the strategic liquidity of Aave is something that requires our attention.

That’s why I was supportive of the recent AAVE <> BAL token swap and will continue as long as it’s budget-wise coherent, to support Aave DAO voting power increase.

That said with this specific opportunity I’ll support passing.

  1. other DAOs are expected to bid close to market price making the potential discount (if any) less attractive
  2. the smart-contract owning veBAL is limited in capabilities and won’t be allowed to boost specific tokens linked to the safety module for example.
  3. Discussions to bypass these limitations have been done but it all boils down to trusting the DAO for several weeks, not to “rug” or fail to implement these changes.
  4. the budget needed for this opportunity is significant

as BAL is a quite liquid asset, I personally support the idea of letting this opportunity pass and letting the DAO acquire BAL on the secondary markets later with more time to discuss budget and strategy.

Meanwhile and as expressed on the other thread, I’m supportive of the veAURA acquisition.

2 Likes

Thanks for feedback @MarcZeller.

Let’s park the veBAL opportunity based upon the findings outline above. We can progress the vlAURA proposal as suggested on the other forum thread.

Thank you to those that helped with the due diligence in such a timely manner as this would have caused disruption to plans for the week.

1 Like

I would echo these comments below:

It seems this is a continuation of the Balancer acquisition (Part 1 and Part 2.) Are we able to bid on a specific portion of the veBAL or it must be the whole lot?

FWIW, it seems we are quickly marching towards the deadline so it will not be feasible.

While Tribe’s dissolution presents interesting opportunities, I would caution against over-investing in a single ERC20 asset while we continue through market volatility.

As a DAO this would bring our Balancer position to ~410,000 BAL/veBAL at a market value of ~$2,800,000.

Bidding via forums can be messy - a deal can quickly become above market. It seems more beneficial to explore an OTC deal with a different asset and demand, such as vlAURA.

1 Like

due to nature of veToken seems unlikely we can acquire a share, it’s the whole lot or nothing imho.

3 Likes