I join the opinion that market buying CRV when you can use your earned aCRV is inefficient.
aCRV earned by the protocol accounts for ~20% of the bad debt. This is 20% less CRV you need to buy from the market at a premium, given the amount and pace needed to repay the loan within a certain time.
This aCRV is barely productive and I would consider it within the long-tail asset group to be ‘consolidated’.
I also wonder whether it is a good idea to redeem and sell aRAI. RAI is decentraliced, unlike USDC, and although its price can fluctuate, it can be consider as a safe asset and thus kept to diversify the stablecoin exposure of the DAO.
Following the cooldown period, Gauntlet will transfer the AAVE to the Ecosystem Reserve Contract: 0x25f2226b597e8f9514b3f68f00f494cf4f286491 and will send a follow up here with the transaction receipt.
We don’t have a strong opinion on either option, but I think it’s important to look at things holistically when choosing between repaying the excess debt with 100% of USDC and retaining aCRV vs. utilizing aCRV and paying the remainder with USDC.
To add to this and while it does distract a little from the main conversation, the community must decide the value that the current aCRV holdings bring to the future implementation of aTokens. If we deem CRV an important tool in stimulating Curve LP tokens as collateral on Aave, earn 3CRV, and/or support GHO. Will it be a mistake to save on costs now by utilizing our aCRV and then having to repurchase it further down the line?
Nonetheless, we can see in the table that of the $18.8M in the collector contract ~82% (~$15.4M) is made up of various stablecoins. This is a pretty healthy number given the size of total assets.
Then if we consider Option 1: using aCRV + paying the remainder in USDC, stablecoins as a proportion of total assets slightly increase by 0.07%. Alternatively, under Option 2: retaining aCRV and only utilising USDC to repay the bad debt. The proportion of stablecoins for all assets drops to 80.42%, a 2% drop from previous levels.
Under both options, I’d argue that the amount and composition of stablecoins remain strong and the decision ultimately comes down to how optimistic the community is on the value of CRV to the DAO.
Note: this does not take into account the premium the DAO pays to acquire CRV.
Thanks for scoping out the solutions so quickly. The CRV pool may be accruing more reserve factor collections than debt from this position; yet this debt accrual directly eats into the treasury’s CRV profits. So I’m in support of fast action to minimise the final costs for the DAO.
I appreciate the long term vision of this proposal from @Llamaxyz. Some time ago, the Aave DAO considered a token swap with CRV, more recently it did one with BAL. Why? Because these assets are strategic, there are many ways Aave DAO can benefit from boosted yields on their respective LP tokens and this is more relevant than ever as the Aave DAO prepares to launch:
GHO, which will need deep liquidity, and good incentives to attract it
V3 AMM market, with aggregated boosting
I would support a token swap to get the CRV required to proceed to the liquidation against non strategical treasury holdings or some AAVE from the ecosystem reserve. As this is time sensitive, I would recommend proceeding with a single asset that can cover the full amount such as USDC, to then proceed to the treasury consolidation without rush as this is quite complex operations across markets and chains.