[ARFC] Add Contango Protocol, Cian Protocol and Index Coop to flashBorrowers on Aave V3

[ARFC] Add Contango Protocol, Cian Protocol and Index Coop to flashBorrowers on Aave V3

Title: [ARFC] Add Contango Protocol, Cian Protocol and Index Coop to flashBorrowers on Aave V3

Author: Aave Chan Initiative (ACI)

Dated: 2024-01-31


Summary

The following proposal plans to add Contango Protocol, Cian Protocol and Index Coop as whitelisted actors of the Flashborrowers of Aave V3 on Ethereum, Arbitrum, and Optimism liquidity pools.

Motivation

Contango Protocol is a Dapp that builds perps by automating looping strategies, through Flash Loans. When a trader opens a position, the protocol borrows on the money market, swaps on the spot market, then lends back on the money market, allowing users to actively manage and take leveraged positions on Aave and other protocols.

Cian Protocol is a decentralized automation platform that helps users onboard complex crypto delta-neutral yield strategies in one simple transaction.

Index Coop is an EVM based protocol that enables easy access to complex DeFi strategies by translating them into ERC20 tokens

If this proposal is implemented, all flashLoan fees for Contango Protocol, Cian Protocol and Index Coop users using Aave would be waived.

The Aave-Chan initiative believes that any incurred lost potential revenue will be compensated by the increased competitiveness of the Aave Protocol and the increased borrow volume.

Currently, every flashloan has a 9 bps fee that rewards liquidity providers in Aave. While flashloans were created by Aave, the ecosystem as a whole has replicated this feature, and most protocols do not implement any fees.

The ACI does not support waiving the fees for flashloans in general, as we firmly believe that users’ funds used, even in the context of a single transaction, should be rewarded.

However, some strategic use cases of V3, such as emode, are very fee-sensitive as they mobilize high leverage. Waiving the Contango Protocol, Cian Protocol and Index Coop flashloan fees is expected to make these strategies more convenient and profitable, leading to increased borrow volume and thus increased Aave DAO revenue.

Implementation

Whitelist Contango Protocol, Cian Protocol and Index Coop as part of FlashBorrowers of Aave V3 on Ethereum, Arbitrum & Optimism liquidity pools.

This proposal aims to implement a single AIP, utilizing three similar payloads (one for each network), which will call addFlashBorrower() on the ACL_MANAGER contract.

This AIP grants permission to whitelist any Contango Protocol, Cian Protocol and Index Coop contract for all use cases, such as leveraged positions, EMODE, debt and collateral swaps, with one exception: no smart-contract that migrates a position outside of the Aave ecosystem is eligible for whitelisting.

Useful links

Next Steps:

  1. Collect community feedback on this ARFC
  2. Escalate this proposal to Snapshot vote
  3. If Snapshot vote outcome is YAE, Escalate to AIP vote.

Disclaimer

The Aave-Chan Initiative (ACI) is not associated with or compensated by Contango Protocol, Cian Protocol or Index Coop for publishing this AFRC.

Copyright

Copyright and related rights waived under Creative Commons Zero (CC0).

9 Likes

Agreed on the rationale. I dont know Contango, but I use CIAN and I have always liked it and considered it very value accretive to AAVE.

1 Like

Following governance guidelines, the following proposal has escalated to ARFC Snapshot stage.

Vote will start tomorrow. We encourage everyone to participate.

After ARFC Snapshot publication, that start tomorrow, ACI has been approached by Index Coop to formally request an addition to the following ARFC and ARFC Snapshot to include them also as flashBorrowers on Aave V3.

Therefore we will modify both ARFC and ARFC Snapshot, (that will start tomorrow), to include them.

Supporting this. No need for another proposal. Keep it simple.

1 Like

This proposal makes sense to us as well. However, given that it relies on the assumption that lost revenue can be mitigated by increased borrow volume, this should be tracked. If over time this is not the case then the relevant protocol should be removed as flashborrowers on Aave v3.

Thank you everyone who participated in the discussion, as well as voting.
Following Snapshot monitoring, the following ARFC Snapshot has passed reaching both quorum and YAE as winning option with 595K votes, to add Contango Protocol, Cian Protocol and Index Coop to flashBorrowers on Aave V3.

Next step will be AIP stage where there will be the final vote.