ARC: Q2 Dynamic Risk Parameters

Risk General
15

This will be my last answer on the topic before going back to neutrality.

I’m a simple man using simple words and my feeling is that we’re trying to check the temperature with a pressure gauge while evaluating the budget dedicated to this.

The ecosystem reserve is a community-own resource that will run out eventually, it’s up to everyone’s responsibility in the Aave community to make sure this reserve is used at its best while it last. It’s a stock of money. There’s simply no sustainable way to make a budget of recurring expanses on a stock.

The protocol fees collected in the Aave collector contracts is the protocol revenue, it can go up and down with Aave protocol usage, but it’s a flow. Using this flow metric as the reference of the potential budget is the only way to build a sustainable relationship that can last for years and grow equally with the success of the protocol.

According to the Aave Weekly the protocol revenue for last week was 851k$ (44.3M$ annualized)

The current discounted proposal represents around 13% of ALL Aave protocol revenue.

so here are my last points on the topic:

  1. let’s all agree to stop “total Borrow” bps metrics, the only sustainable way to establish a sustainable budget is to check the actual protocol revenue, and discuss based on this.
  2. on this new sustainable metric, do we want as a community and as a protocol, each quarter, work two weeks for gauntlet and the rest for other stuff? do we want more? less? the clear consensus on discussions so far is that Gauntlet work is valuable and add value to the Aave protocol.
    but it’s up to the aave community to decide on this and I’ll go back to neutrality.
  3. in reaction to @sakulstra, IMHO it’s all fair and square that Gauntlet doesn’t share tools that are highly valuable, anyone can build their own tools and “compete”.
  4. it’s out of scope for this quarterly budget, but I’ll like to introduce the idea to gradually cover this budget less with AAVE assets from the ecosystem reserve et increasingly with stablecoins such as USDC from the aave collector. One day, the Ecosystem reserve will run out of funds, and we need to think ahead and gradually prepare for the transition.
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