I support this initiative, as I feel it aligns pretty well with the interests of the Aave community:
- A swap AAVE<>BAL feels like a perfect representation of the collaboration between Balancer and Aave communities, lasting for a pretty long time already. It makes sense that both the Balancer DAO and the Aave DAO will have governance power on each others’ systems.
- Diversification-wise, I think it is acceptable too, as the amount of AAVE is small enough compared with the current reserves. Still, I think this argument is of lower importance than the previous, as in my opinion this kind of swap should only be done with really close partners. Having the Aave DAO accepting a deal involving the native governance asset should be considered a privilege (same as I guess the Balancer community thinks).
- Following with the previous, I would also like to understand if these types of swaps will not be so frequent from Balancer’s side, and only with a really solid group of long-term partners. That will definitely give more confidence to Aave community members. Maybe somebody of the Balancer community could comment on that?
- Regarding the extra purchase of BAL, I agree it is a priority to not be submitted to arbitrage on it, together with keeping some simplicity on the purchase, for potential future scalability of the process. So most probably makes more sense to have that as the second phase of this.
Lastly, I would say it could be interesting to start modeling a bit if it could be worth it to redirect some specific liquidity mining to Balancer <> Aave pools, for example, the boosted of stablecoins. Considering the introduction of new veBAL dynamics.