[ARFC-Addendum] Update Boosters & diluters for Merit Round 2

[MarcZeller]

Title: [ARFC-Addendum]Update Boosters & diluters for Merit Round 2

Authors: @ACI (Aave Chan Initiative)

Date: 2024-04-03

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Simple Summary

This ARFC-Addendum proposes to make booster & diluters evolve inside Merit to adapt to the DeFi ecosystem landscape evolution, introducing new diluters & removing a booster action.

Motivation

Merit wETH has been a clear success with nearly 200k ETH, leaving other protocols to join Aave V3. 160k ETH specifically left Morpho V3 to join aave, forcing a re-balance, and has made Morpho the second largest borrower & fee payer (>11%) of wETH in Aave, forcing them to pay north of 1600 ETH to the aave DAO per year.

https://etherscan.io/token/0xeA51d7853EEFb32b6ee06b1C12E6dcCA88Be0fFE#balances

Merit GHO has also been a success and reinforced our Safety module (17M$), secondary liquidity, and peg. It allows the DAO to restart GHO minting while keeping the peg in check.

GHO is expected to provide 10% of all DAO overall revenue by next week.

However, we have to witness less collaborative behavior from some ecosystem actors. In light of this, it seems suboptimal for the Aave DAO to reward uncollaborative protocols & behaviors.

This is why we suggest stopping any subsidies to the makerDAO ecosystem; the Aave DAO has already paid millions via the AAVE and third-party LM programs and has been repaid by creating competitive forks and activating D3M in a protocol that has stolen millions of revenue from this DAO with no safety track record using a market sensible collateral.

With this proposal, a single $ in Morpho Blue or Spark will nullify any Merit Airdrop for the user.
sDAI is considered a makerDAO product, not a Spark product; holding simply sDAI or having it in Aave will not dilute a user.

This proposal aims to be enabled for Merit Round 2 and all subsequent rounds.

Specification

Proposed Changes:

Conservative Option

1. Remove “MakerDAO fren” Boosters. for the usage of sDAI as collateral

Aggresive Option

1. Remove “MakerDAO fren” Boosters. for the usage of sDAI as collateral
2. Include Morpho Blue & Spark users in the “User of Non-Aligned Protocol” diluter.

Next Steps

1. If this proposal reaches a consensus on Snapshot, update the Merit reward system accordingly

Disclaimer

This proposal is made independently by the ACI.

Copyright

Copyright and related rights waived via CC0.

[Emilio]

I am in general in favor of removing boosters from sDAI as directly connected to reducing risk within the Aave protocol. I have reservations though in diluting merit users who use other independent protocols, situation in this case is much different than with the Morpho aggregator and i am all for letting users choose whatever they deem best, as long as it doesnt directly impact Aave. I think it would be best if the snapshot vote separates the two rather than being a single “yes/no” answer to have more granularity of choice

[TokenLogic]

We also share the view that sDAI should be excluded from Merit and whilst we are supportive of using economic incentives to attract users to Aave. Whether this should draw clear lines in the sand as presented is an ongoing discussion point. For optimisers built on Aave, it make more sense to pursue this approach. Extending the tag “Non-Aligned” to Spark and Morpho Blue is something we would like to have as a separate option on Snapshot.

[MarcZeller]

Following feedback, we implemented a conservative & Aggressive option. This proposal will be escalated to snapshot today.

[ACI]

The current proposal has been escalated to ARFC-Addendum Snapshot, taking into account latest changes.

For reference, you can also check its related ARFC Risk Parameters for DAI Update and the Snapshot, that will be open to vote today.

Vote will start tomorrow, we encourage everyone to participate.

[ACI]

After Snapshot monitoring, the current ARFC Snapshot has ended recently, reaching both Quorum and CONSERVATIVE option as winning option with 536K votes.

Merit reward system will be updated accordingly.