[ARFC] Deploy a Whitelabel Aave V3 Instance on Ink

Governance
1

[ARFC] Deploy a Whitelabel Aave V3 Instance on Ink

Author: Ink Foundation & ACI

Date: 2025-06-19

Summary

This proposal aims to deploy a whitelabel version of Aave V3 for the Ink Foundation. By granting a license to deploy a centralized version of the Aave codebase, Aave can expand its technology adoption while creating new revenue streams through partnerships with innovative platforms.

Motivation

The Ink Foundation seeks to leverage Aave’s battle-tested infrastructure to create a native lending platform. This partnership represents an opportunity for Aave to expand its influence in the institutional lending space while maintaining its commitment to technological excellence.

Specification

Key aspects of this deployment include:

  • Centralized Governance: The instance will initially be centrally governed by the Ink Foundation without a governance token
  • Service Provider Support: Aave DAO service providers (including ACI, Chaos Labs, and others) will maintain and contribute to the deployment for the initial 6-month period, after which Ink Foundation will need to establish a commercial arrangement for continued support
  • Revenue Sharing: The Aave DAO will receive a share of all revenue generated by the platform. This should be greater than or equal to the equivalent of a Reserve Factor of 5% based on borrow volume in all pools.
  • Insurance Disclaimer: This instance will not be covered by the DAO-operated Umbrella.
  • Branding: The instance will be branded as “Powered by Aave” but retain unique branding as determined by Ink Foundation.
  • Ink Foundation and its centralized partners will focus on this instance as their exclusive onchain lending vertical and will refrain from communicating, incentivizing, integrating or doing partnerships with other lending protocols for a minimal period of 12 months after deployment.

POL and Incentives

The Ink Foundation has committed significant incentives to bootstrapping this instance. This includes multiple liquidity mining programs that are expected to bring over $250m in early supply to the instance.

A initial amount of 4% of future governance token supply has been allocated to bootstrapping incentives. In addition the Aave DAO will authorize incentives for a mix of use cases including but not limited to user borrowing rebates, GHO liquidity incentives, and revenue cash back. These incentives can be in a mix of GHO or Aave tokens. AFC is responsible to manage the incentives paid by Aave DAO and will finance them via treasury AIPs.

The Ink Foundation is committed to making the instance a success and will work with Aave service providers to plan and distribute incentives to users.

Next Steps

  1. If consensus is reached on this [ARFC], escalate this proposal to the Snapshot stage.
  2. If the Snapshot outcome is YAE, this proposal will be escalated to AIP stage.
  3. AIP written with relevant infrastructure deployment made on Ink chain and governance transferred to Ink Foundation.

Disclaimer:

This proposal is powered by Skywards. The Aave Chan Initiative is not directly affiliated with Ink and did not receive compensation for the creation of this proposal.

Copyright:

Copyright and related rights waived under CC0

7 Likes
4

Broadly in favour of this ARFC however I do have a couple of questions.

• What specific roles will Aave DAO service providers play during the initial six-month support period & how will this impact on the pipeline of proposals coming to Avve? *We’re all aware of how stretched resources are with some service providers at the moment.

• How will the revenue share arrangement be monitored and enforced to ensure compliance with the Reserve Factor of 5% or more?

Again broadly in favour but would like to know the resource implications on service providers.

3 Likes
5

Really excited for this deployment to happen

Just a quick question: why isn’t AAVE being deployed directly on Ink? Is the DAO not seeing this L2 as a promising growth opportunity? Or is that a different reason

1 Like
6

Interesting proposal and broadly in favour of it, but given that it’s a whitelabel instance and not a deployment, we have a few questions:

  • Is there a framework for white-label instances that we should be following to set the revenue share? The revenue sharing and profit share is less than that approved by the DAO in the Framework for Instances and Friendly Forks. Why is this so?
  • Why is this a whitelabel instance and not just another instance of Aave?
  • @MrKris’ question around service providers is fair - how much effort will be required on this instance?
5 Likes
7

Summary

LlamaRisk recommends the deployment of Aave to the Ink network, conditional to a technical review by @BGDLabs. Key considerations include the Ink Foundation’s developing familiarity with Aave’s codebase, ongoing assessment of technical alignment, and the current liquidity distribution on Velodrome.

We have previously reviewed the network and found that key risks included a centralized sequencer and limited network maturity (low TVL, high TVL concentration into Velodrome, and limited pricing infrastructure).

Since then, these risks have remained the same, except Chainlink Data Feeds going live recently. Limited TVL and high DEX concentration results in potentially low initial supply caps. The team is optimistic and expects to reach $1B TVL in under 90 days.

Risks

LlamaRisk sees primarily counterparty risk and technical risk. Market risk is also present.

This instance is operated by the Ink Foundation, which has yet to manage such technology. As evidenced by the hard work of countless service providers, operating an Aave codebase is a complex endeavor in the most liquid of ecosystems. LlamaRisk looks forward to working alongside a responsive team of experts from the Ink Foundation to help mitigate the countless risks incurred by operating a lending protocol - which LlamaRisk has been reassured its (and other service provider’s) expertise will be called upon on a case by case basis.

The Network Review from @BGDLabs will also offer further technical insights and validation. This review, customary for Aave protocol deployments to any new networks, is being conducted to ensure thorough due diligence. This means there is a risk that Ink is a potentially unsuitable environment for the protocol. While Ink is a superchain (meaning it has many similarities with many networks on which the protocol is already flourishing), this risk should not be discounted. Given the critical importance of technical risk to Aave, we will reserve our recommendation to proceed until this has been completed and all findings are resolved.

image
image2936×1552 423 KB

Source: Ink liquidity pools, Velodrome, June 25, 2025

Finally, limited market liquidity presents a risk to the protocol on Ink. While good starting liquidity for major assets is visible, it is insufficient to facilitate large trades with limited price impact - resulting in the potential for uncollateralized positions. This low level of liquidity will necessitate low supply caps, resulting in limited revenue potential. It is worth noting that nearly all liquidity on this network is concentrated into Velodrome, with many large pairs having one address supply 90% of the liquidity, further increasing market risk as this liquidity could quickly disappear.

Disclaimer

This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.

The information provided should not be construed as legal, financial, tax, or professional advice.

3 Likes
8

This proposal marks a strategic step toward expanding Aave’s footprint and monetizing its codebase. However, several legal and governance points must be clarified to protect the DAO and ensure accountability:

  1. Licensing & IP Protection
    A formal licensing agreement should outline the scope of use, branding (“Powered by Aave”), revenue-sharing terms, and IP safeguards. This prevents ambiguity around commercial use of Aave V3.

  2. DAO Liability & User Expectations
    Given the use of Aave branding and shared contributors, clear disclaimers must separate this instance from DAO governance and insurance. Users must understand it’s operated independently by the Ink Foundation.

  3. Service Provider Transparency
    If Aave DAO-funded contributors (e.g., ACI, Chaos Labs) are also working with Ink, potential conflicts of interest should be disclosed and scoped to avoid governance concerns.

  4. Revenue Enforcement & Auditing
    The 5% Reserve Factor equivalent should be backed by a formal revenue agreement with enforceable terms, regular reporting, and clear on-chain or off-chain auditing mechanisms.

  5. Exclusivity Clause Risks
    The 12-month exclusivity to avoid engagement with other lending protocols should be time-bound, reasonable, and not overly restrictive to avoid anti-competitive implications.

This proposal has strong strategic potential, but to move forward responsibly, legal and governance frameworks must be clearly defined and codified. Let’s scale Aave’s tech without scaling its risk.

1 Like
9

What about this? Would be nice to get some additional insights

2 Likes
10

Linking here BGD’s approach to friendly fork, relevant for this proposal for a friendly fork of Aave BGD. Our approach to Aave v3 friendly forks

2 Likes
11

After discussions with the Ink Foundation team, we have added the following information on the planned POL and Incentives for this whitelabel instance. With the large commitment from the Ink Foundation for bootstrapping incentives, and the future plans for integration of the instance in Ink’s ecosystem and the exchange, we believe this is a strategic initiative that will expand Aave DAO’s footprint by providing further distribution for the protocol.

2 Likes
12

The current proposal has been escalated to ARFC Snapshot.

Vote will start tomorrow, we encourage everyone to participate.

13

It would be helpful if this point or question could be addressed before the vote goes live, for the sake of transparency (regardless of the underlying reason)

Even if, for example, Kraken just wanted to retain full control over their own version of the protocol (which is perfectly understandable) it would still be nice to clearly communicate that to DAO participants

2 Likes
14

I would like to agree with the previous comments.
It would be great to get some feedback on the questions asked by @MrKris, @sid_areta and @Tor_GAINS.

Also regarding the RF, will it be fixed at 5% for all assets or will it be mixed per asset? Will the revenue sharing start at day one and automatically streamlined to the DAO treasury or will this be handled manually on a monthly basis?

2 Likes
16

Hello there

Fantastic news on the Snapshot vote passing

However, could we revisit the question(s) mentioned above?

17

After snapshot monitoring, the current ARFC Snapshot ended recently, reaching out both Quorum and YAE as winning option with 789.6K votes.

Therefore [ARFC] Deploy a Whitelabel Aave V3 Instance on Ink has PASSED.

Next step will be the publication of an AIP for final confirmation and enforcement of the proposal.

18

This topic was automatically closed 30 days after the last reply. New replies are no longer allowed.