[ARFC] Aave V3 Deployment on Scroll mainnet

Title: [ARFC] Aave V3 Deployment on Scroll mainnet

Author: Aave-Chan Initiative

Date: 2024-01-09

Summary:

Proposal to deploy an Aave v3 MVP to Scroll mainnet with limited assets onboarding and conservative risk parameters in order to allow Aave to establish a strategic position in the Scroll ecosystem while limiting risk exposure.

Abstract:

This ARFC proposes the deployment of Aave V3 on Scroll mainnet. Scroll is an EVM-equivalent zk-rollup with the primary goal to provide scalability to Ethereum in the most robust and secure way. Scroll has been open source from day 1, has a strong in-house security team paired with rigorous audits, third party provers from their mainnet genesis block and are conducting a gradual decentralization of our sequencer network.

Motivation:

Aave will be given a prominent role in the early Scroll ecosystem and will be able to establish a strategic presence early on. Aave will be in good company as 150+ projects are launching on the network and Aave will be able to harness a vibrant new ecosystem that expands across the globe.

Proof of Liquidity and Deposit Commitments:

Recognizing the importance of stablecoins to the DeFi ecosystem generally and Aave ecosystem in particular, Aave’s expansion onto Scroll mainnet will be supported by immediate liquidity of 500,000 USD in $AAVE staked to the Aave Safety Module to provide additional security guarantees and limit risk exposure to the DAO.

Specification:

The proposal will detail the deployment of Aave V3 on Scroll mainnet with three collaterals (WETH, USDC, wstETH) and one borrowable asset (USDC). We consulted Gauntlet and Chaos Labs for preliminary risk parameters.

Risk Parameter WETH wstETH USDC
Isolation Mode NO NO NO
Enable Borrow YES NO YES
Enable Collateral YES YES YES
Emode Category Eth-correlated Eth-correlated N/A
Loan To Value 80% 80% 82.5%
Liquidation Threshold 82.5% 82.5% 85%
Liquidation Bonus 5% 5 5%
Reserve Factor 15% 15% 15%
Liquidation Protocol Fee 10% 10% 10%
Borrow Cap 11000 1N/A $40M
Supply Cap 1100($20M) 500($10M) 40m($40M)
Debt Ceiling N/A N/A N/A
uOptimal 80% 45% 90%
Base 0% 0% 0%
Slope1 4.8% 4.8% 4%
Slope2 80% 80% 60%

Deployment Checklist:

  • Risk service provider’s feedback :heavy_check_mark:

  • Technical evaluation

  • Oracle recommendation :heavy_check_mark:

  • The graph support :heavy_check_mark:

  • Cross-chain messaging infrastructure for governance :heavy_check_mark:

Useful Links:

TEMP CHECK forum post: [TempCheck] Aave v3 MVP deployment on Scroll mainnet

TEMP CHECK Snapshot vote: Snapshot

Disclaimer:

As part of its delegate platform, the ACI promotes L2 diversity. The Aave-Chan Initiative (ACI) is not associated with or compensated by Scroll for publishing this ARFC.

Next Steps:

  1. Refine the ARFC based on community feedback and risk service provider recommendations.
  2. If consensus is reached and the proposal is refined, submit the ARFC for a snapshot vote for final approval.
  3. If consensus is reached, submit a deployment AIP to activate Aave V3 on the Scroll.

Copyright:

Copyright and related rights waived via CC0.

10 Likes

We’re supportive of deploying V3 on Scroll!

3 Likes

We supportive of deploying Aave V3 to Scroll for the following three reasons:

  1. Early entry into Scroll represents a fantastic investment in anticipation of Ethereum 2.0’s future.
  2. Many DeFi projects are considering deploying to Scroll positively.
  3. As Aave V3 Fork does not exist on Scroll, the deployment of Aave V3 can offer Scroll users a new lending market experience
4 Likes

Scroll Risk Analysis and Initial Parameter Recommendations

Recommended Initial Parameters

Gauntlet and ChaosLabs recommend the following initial parameters for wETH, wstETH, and USDC on Aave V3 Scroll.

Risk Parameter WETH wstETH USDC
Isolation Mode NO NO NO
Enable Borrow YES YES YES
Enable Collateral YES YES YES
Emode Category ETH ETH No
Loan To Value 75% 75% 77%
Liquidation Threshold 78% 78% 80%
Liquidation Bonus 6% 10% 5%
Reserve Factor 15% 15% 10%
Liquidation Protocol Fee 10% 10% 10%
Supply Cap 400 130 1,000,000
Borrow Cap 320 45 900,000
Debt Ceiling N/A N/A N/A
uOptimal 80% 45% 90%
Base 0% 0% 0%
Slope1 3.3% 7.0% 5%
Slope2 80% 300% 60%

Supply caps

We recommend setting supply caps at 2x the available liquidity under the Liquidation Penalty price impact. Given the low liquidity on DEXes for wstETH, we suggest launching with conservative supply caps equal to ~10% of the total circulating supply.

eMode

We recommend the ETH eMode pools start with the same parameters as Ethereum mainnet, Optimism, and Gnosis: 93% LT, 90% LTV, and 1% LB.

Supporting Data

Since the official launch of Scroll on Mainnet, the total assets circulating has reached $45M with a TVL of $17M.

image

Contracts and Circulating Supply

Contract Token Circulating Supply
0x06eFdBFf2a14a7c8E15944D1F4A48F9F95F663A4 USDC 11,247,771.00
0x5300000000000000000000000000000000000004 WETH 1,764.82
0xf610A9dfB7C89644979b4A0f27063E9e7d7Cda32 wstETH 1,338

DEX Liquidity

  • 400 WETH can be swapped into USDC at 6% slippage
  • 120 wstETH can be swapped into WETH at 10% slippage

Top Pools on Scroll Dexes

Zebra
Zebra DEX

iZiSwap
iZiSwap

SyncSwap
SyncSwap

Ambient
Ambient

5 Likes

We support deploying Aave V3 on Scroll Mainnet!

With each of these deployments, Aave continues to grow its reach across the ecosystem.

3 Likes

Scroll Initial Parameter Recommendations (1/17/24)

Recommended Initial Parameters

Gauntlet and ChaosLabs have refreshed our recommendations given the latest liquidity data for the following initial parameters for wETH, wstETH, and USDC on Aave V3 Scroll.

Risk Parameter WETH wstETH USDC
Isolation Mode NO NO NO
Enable Borrow YES YES YES
Borrowable in Isolation NO NO YES
Enable Collateral YES YES YES
Emode Category ETH ETH N/A
Loan To Value 75% 75% 77%
Liquidation Threshold 78% 78% 80%
Liquidation Bonus 6% 7% 5%
Reserve Factor 15% 15% 10%
Liquidation Protocol Fee 10% 10% 10%
Supply Cap 240 130 1,000,000
Borrow Cap 200 45 900,000
Debt Ceiling N/A N/A N/A
uOptimal 80% 45% 90%
Base 0% 0% 0%
Slope1 3.3% 7% 6%
Slope2 80% 300% 60%

eMode

We recommend the ETH eMode pools start with the same parameters as Ethereum mainnet, Optimism, and Gnosis: 93% LT, 90% LTV, and 1% LB.

1 Like

The following proposal has been escalated to ARFC Snapshot stage.

Vote will start tomorrow. We encourage everyone to participate.

Following snapshot monitoring, the ARFC Snapshot has passed with YAE as winning option with 648K votes. Thank you for participating.

Next step will be the publication of an AIP to activate Aave V3 on Scroll if decided.

1 Like

After the positive outcome of the ARFC Snapshot and finishing the technical preparations, we have created an AIP for the community to approve the activation of Aave v3 Scroll.

Voting will start in approximately 24 hours, participate :ghost:

https://vote.onaave.com/proposal/?proposalId=20

2 Likes

During the extra on-chain review performed by Certora, it has been detected that the Slope2 parameter for WETH has been mis-configured to 8% instead of 80%.
Even if the AIP description properly discloses the 8%, that is not following the previous risk recommendations and we think that should be changed to 80%, even if doesn’t cause any immediate problem.

Given that Scroll is a new pool, the POOL_ADMIN role is temporarily given to the Aave Guardian on the proposal, for situations like this. This can be used to set the parameter to the expected 80% value, avoiding extra cancellation and resubmission overhead. We will coordinate with the Guardian the change.

1 Like