[ARFC] Chaos Labs Risk Parameter Updates - GNO on V3 Gnosis
Vote Result: YES
Rationale
Chaos’ recommendations given GNO’s liquidity profile and its recent volatility make sense. Optimising its parameters is logical given the changing market conditions. Therefore, we will vote YES in favour of this proposal.
[ARFC] Onboard New Risk Service Provider
Vote Result: 1. LlamaRisk, 2. Allez Labs, 3. OpenBlock
Rationale
We have voted YES in favour of the LlamaRisk and Allez Labs TEMP CHECKs and NO against the OpenBlock TEMP CHECK. We will stick to this view, especially given the quality of analysis provided by LlamaRisk and Allez Labs and the relative lack of quality provided by OpenBlock, and only consider LlamaRisk and Allez Labs in our analysis.
The table below outlines our framework for assessment:
| Criteria | Description | Winner | Explanation |
|---|---|---|---|
| Cost | Cost of services | LlamaRisk | LlamaRisk has proposed a cost of $250K while Allez Labs has proposed a cost of 400K GHO. While cost is not a big factor in our decision, we think it should play a role in a comparison. |
| Experience | Level of risk management experience | Equal | LlamaRisk has significant relevant experience with Curve and has assessed a variety of assets (RWAs, LSTs, LRTs). They have assessed LST collateral risk in depth, and have experience in legal regulatory advisory and policy work. They have a battle-tested agent-based simulation model. Allez Labs has great experience in its former Aave team which helped develop Aave’s risk frameworks, showing great intimacy with the Aave protocol. They were involved in the ideation of GHO and created the GSM, proving their deep stablecoin experience. |
| Added Utility to Aave | The added value the risk provider can bring to Aave on top of that already provided by Chaos Labs, judged by scope, credentials, and strength of team | LlamaRisk | LlamaRisk’s legal regulatory and advisory expertise brings a new dimension to Aave’s risk management. Their experience with crvUSD, a stablecoin that is not GHO, may also bring further insight, in our opinion, to how GHO adoption can be increased. Moreover, LlamaRisk’s experience with providing risk reports for RWAs, LSTs, and LRTs will be helpful for Aave going forward, especially as RWAs and LRTs become more prominent. For the former, LlamaRisk’s legal and regulatory expertise may become very relevant. This does not mean that we are discounting Allez Labs’ expertise at all, which is substantial as well. We feel that LlamaRisk has an edge given their expertise can better complement what Chaos Labs already brings to the table. |
| Openness & Transparency | Level of insight into risk models & decision-making | Allez Labs | Allez Labs will democratise access to its risk insights and open source its data pipelines and models. LlamaRisk will provide disclosures and reports on their spending. We think both providers are relatively equal, but Allez Labs’ emphasis on open sourcing its models puts it slightly ahead. |
| Alignment with Chaos Labs | Relationship and working model with Chaos Labs | Equal | It is important for both providers to work hand-in-hand with Chaos Labs. We feel both providers are equal here given Chaos’ comments on both forum posts. |
Given the above analysis, we think the added utility brought by LlamaRisk sets it apart and we will therefore vote in the following order:
Scroll wstETH Emission Manager
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal.
Optimism sUSD Emission Admin
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal.
Mainnet PYUSD Emissions Admin
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal.
[ARFC] “Merit is Forever” Reward System Program Extension
Vote Result: NO
Rationale
Extending Merit given the success of the first round makes sense generally.
However, we are aligned with the feedback from @midapple. Having a Merit Review Committee, developing specific KPIs, having a phased funding approach, a formalised process for how adjustments can be made, and an extended discussion period for a proposal that asks for $20M from the DAO seems very logical. While we are in favour of Merit and the success it has brought to the DAO, some more checks and balances in a decentralised governance system are absolutely necessary. Simply allocating a one-off budget of $20M without consideration for any other funding options or a phased approach is not recommended for a DAO which requires checks and balances to be fair, neutral, and hear all voices. We also think there needs to be a defined process and structure for the L2s that are chosen for expansion of Merit. All of these are details that, for a $20M program, should be defined up-front.
Therefore, we will vote NO against this proposal until there is more clarity on the above aspects.
Temporary Freeze of Long-Tail V2 Assets
Vote Result: YES
Rationale
Freezing long-tail assets to minimise risk on Aave v2 is logical especially given the recent market volatility. Therefore, we will vote YES in favour of this proposal.
Ethereum V2 LT Reductions
Vote Result: YES
Rationale
Deprecating Aave v2 is crucial and the amount of liquidations is fair, given that the forum post has been up for 1 week. Therefore, we will vote YES in favour of this proposal.
Set Price Cap Adapters for Aave V2
Vote Result: YES
Rationale
Given that CAPO has been implemented on Aave v3 already and that the proposal is a purely technical one to improve security on Aave v2, we are in favour of this proposal and will vote YES in favour of it.
LayerZero Bridge Adapter Update to V2
Vote Result: YES
Rationale
It makes sense to update the a.DI LayerZero adapter with the new version given that LayerZero has updated to v2. Therefore, we will vote YES in favour of this proposal.
Risk Parameter Updates - OP on V3 Optimism
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC proposal that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
[TEMP CHECK] GHO Cross-Chain Rollout Plan - First Network
Vote Result: Arbitrum
Rationale
The two protocols that make the most sense to deploy on, given the feedback from TokenLogic and Chaos Labs, are Avalanche and Arbitrum. The incentives on Avalanche are high, but it is crucial for Aave to access the largest DeFi ecosystem, which is Arbitrum. This is made simpler by the fact that Aave Protocol Embassy (APE) applied for the 750k LTIPP grant from Arbitrum to enable expansion of GHO on the protocol.
Being intimately involved in the Arbitrum ecosystem ourselves, we have seen the potential for GHO to grow on Arbitrum and obtain incentives via grant programs. Lastly, Arbitrum has a well-developed DeFi ecosystem which would increase GHO utility more than the other chains through the integrations it offers.
Therefore, we will vote in favour of Arbitrum as the first chain for the GHO cross-chain rollout.
[ARFC] Update Aave Liquidity Committee SAFE
Vote Result: YES
Rationale
A 3-of-5 multi-sig is still safe and ensuring operational efficiency is important. If a risk service provider wants to take on this additional task, we would welcome it, but given that the role of the ALC is mostly operational, a 3-of-5 multi-sig still does the job. Therefore, we will vote YES in favour of this proposal.
[TEMP CHECK] Introducing “FastPass” - A Safety Module Update
Vote Result: YES
Rationale
The idea of FastPass is intriguing, and we would be in favour of exploring this further with input from Aave’s risk providers on specific details of the churn rate and all risk considerations. Buying back Aave from the market to fund safety incentives seems at first glance the best use of the funds, but we would like to see further analysis on this as well. Given that the risk providers will analyse this in detail at the ARFC stage, we will vote YES in favour of this proposal.
Chaos Labs Engagement Amendment
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC proposal that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
V2 Stable Debt Offboarding
Vote Result: YES
Rationale
Given that the stable rate has been progressively deprecated and the fact that this partial deprecation of the stable rate has caused technical overhead to the protocol, BGD thinks that the better solution is to deprecate stable rates and then disclose the bug. The bounty for a critical bug has also been communicated well in advance, and as BGD and Certora have both classified this bug as critical, the $1M bounty makes sense. Splitting the payment in 50/50 aUSDT and AAVE tokens is logical as well. Therefore, we will vote YES in favour of this proposal.
[TEMP CHECK] Onboard ggAVAX to Aave V3 on Avalanche
Vote Result: YES
Rationale
Adding ggAVAX to v3 Avalanche makes sense because:
Therefore, we will vote YES in favour of this proposal.
[ARFC] Updating weETH Risk Parameters
Vote Result: YES
Rationale
Increasing weETH’s risk parameters via supply and borrow cap increases, a change to the optimal ratio to 35%, and the increase in RF to 45% will help 1) increase revenue for Aave, and 2) meet demand for weETH as a collateral and borrowing asset that is clearly present on Aave. Given that Chaos’ analysis says that increasing supply and borrow caps carries minimal economic and liquidity risk due to the high amount of liquidity available for withdrawal and the dynamic of being able to atomically mint weETH through wETH and execute liquidations, this risk seems comfortable enough to take for the protocol.
Therefore, we will vote YES in favour of this proposal.
[ARFC] aAMPL Second Distribution
Vote Result: YES
Rationale
Having observed the quality of BGD Labs and Chaos Labs’ analyses and efforts to distribute aAMPL to holders, the bug not being an Aave-native one, Aave’s service providers not implementing the integration of AMPL on Aave and not even creating the design of the integration, combined with the fact that $1.05m in stablecoins are being allocated to compensate AMPL holders, we believe that the distribution is more than fair. Moreover, the Ampleforth has not extended even an iota of effort in comparison when a portion of the issue is attributable to them as well. Another key point with participating in DeFi is that it is at the user’s risk - there are always risks of bugs with smart contracts and implementations, and the effort made by Aave to make AMPL users whole is genuinely commendable. Therefore, we will vote YES in favour of this proposal.
Risk Parameters for DAI Update
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.