[ARFC] Deploy Aave V3 to MegaETH

Governance New Market
1

Greetings, Aave community,

Summary

We are reopening the ARFC to deploy Aave V3 on MegaETH with updated terms and parameters to be defined by Risk SPs. The original thread established that MegaETH is an EVM-compatible, real-time L2 still finalizing core infra, including Chainlink oracles. As progression has been made, and the upcoming launch of MegaETH’s Mainnet approaches, the DAO should consider preparing an Aave V3 MegaETH deployment.

Motivation

Launching on MegaETH at Day 0 positions the protocol to capture the network’s earliest activity and convert it into meaningful supply and borrowing demand. Incentives distributed under governance-defined KPIs give the DAO a direct lever to tie rewards to behaviors that increase protocol revenue. The MegaETH deployment is a material revenue opportunity for the DAO, with early traction, deep liquidity, and strong utilization that can support strong revenue streams.

Specifications

Aave will be live on MegaETH at mainnet Day 0. The initial token listing, if aligned with Risk SPs, includes:

Category Asset
Bridged btc.b
Bridged ETH
Bridged USDM
Bridged USDT0
Bridged cUSD
Bridged iTRY
Bridged wstETH
Bridged ezETH
Bridged rsETH
Bridged USDe
Bridged sUSDe
Bridged stcUSD
Native MEGA
Native USDM-Y
Native RBT

Oracles

Chainlink is currently developing oracles for MegaETH to be ready for Day 0.

Liquidity Mining

Aave Labs will receive 30 million points from MegaETH. These points may be distributed as incentives on the Aave V3 MegaETH market, in accordance with the Aave DAO GTM strategy. Like other incentives, these will be visible on the Aave interface, while accrual tracking and redemption happen on MegaETH’s site at each two-month season end. Points eligibility is limited to KYC-verified users.

MegaETH will allocate 6% of the total MEGA supply to a KPI framework defined by the Aave DAO. These tokens are released to MEGA stakers when the protocol reaches the milestones specified by governance. The allocation exists as a dedicated pool for performance-based rewards and is structured so that stakers receive the tokens once the corresponding KPIs are met.

Next Steps

If consensus is reached, raise this ARFC to a snapshot. If passed, prepare an AIP, including a list of token contracts, oracle addresses, and parameters provided by Risk SPs.

Disclaimer

Aave Labs is not compensated by MegaETH, nor affiliated with them.

Copyright

Copyright and related rights waived under CC0.

Relevant Links

Original MegaETH ARFC discussion: [ARFC] Deploy Aave v3 on megaETH

MegaETH Tempcheck Snapshot: https://snapshot.org/#/s:aavedao.eth/proposal/0xab1d9c42264c89e1b8f0d807c9ff971f8c3f9f5cc0323072d9e970c110d1e39b

MegaETH Tempcheck discussion: [TEMP CHECK] Deploy Aave v3 on megaETH

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Hello and thanks for putting this proposal up again.

I have a few questions.

  1. Have all assets listed here been checked and approved under the AAcA?
    Cause some assets seem a bit weird to me to be considered to be added. Or I am looking at the wrong asset, as no contract has been provided here (not all are available but still confusing to understand which asset is meant).

  2. Why is Aave Labs receiving these points and not ACI? ACI developed a great tool for this kind of incentive distribution and if i remember correct they even used it for the Ink deployment. Also what does “Aave DAO GTM strategy” mean?
    I have never heard of that in the context of distributing funds/points/incentives. Clarification here would be great for the DAO.

Also the text says

Can you confirm that these points will be distributed to Aave User and won’t be retained by Aave Labs in any way?

  1. Risk manager should now evaluate, just as usual at the ARFC stage the assets to see if these are suitable to be onboarded on Aave, not after the AIP has been voted on. Thats the process the DAO follows and should be followed here as well.

  2. Has the technical evaluation by BGDLabs already started to see if MegaETH is a suitable candidate?

  3. Is there any type of COI, as it wasn’t ruled out here? Is Aave Labs or member of it being compensated by MegaETH or anyhow affiliated with them?
    This should always be included in the Disclaimer, just like all the other SP are doing it.

  4. Under the context of the Aave Labs renewal you are a technical SP and not responsible for growth. See here

    image
    image786×242 25.4 KB

    Growth initiatives should be done by the explicitly chosen SP for this. Otherwise this will create and end up in overlapping work. Additionally it will create confusion when other protocols want to work together with the Aave DAO and don’t know who to contact. I myself help onboarding other teams and would like to keep it clear for myself as well.
    Thats why im not doing these proposals myself, as it hurts the current established and well working workflow with Skywards.

Thank you, looking forward to your answer.

9 Likes
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Opinions expressed here are not those of ACI.

We don’t care about points; we care about DAO revenue generation. As this [TEMP CHECK] Focussing the Aave V3 Multichain Strategy passes and as the state of the estate is currently to have a minimum $2.5M revenue guarantee to deploy to a new chain.

Given that this proposal does not meet that threshold, I intend to vote against it, and I encourage other voters to carefully consider doing the same. We should avoid onboarding instances that require significant service provider bandwidth for limited revenue upside. That time and effort can and should be allocated to higher-impact initiatives.

In terms of assets listed, this list seems too big to me and needs to be focused on where demand is expected to be the biggest. I in fact question the presence of multiple tokens, especially the special tokens as cUSD, that generate very few revenues on the instance of the chain they originate from. I wanted to remind that any asset candidate for a listing monopolizes Chaos Labs, LlamaRisk, and BGD time for analyzing asset security, liquidity, and risk, time that is not allocated for other tasks.

For this reasons I’m against this MegaETH deployment in the curent proposed form

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Could @AaveLabs can provide a link, smart-contract address and/or issuer name for every of these assets please ? There are asset as iTRY for which quick research on Google, Coingecko and CoinMarketCap do not return reliable result. A good source can help to make sure everyone have the same asset in mind and can provide reliable comment

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As a token holder, I understand the motivation but if we have to move forward with the past proposals, this MegaETH deployment does not demonstrate nor guarantee the $2M/year revenue threshold outlined in the multichain strategy framework as @nandy.eth points out.

If this is intended as a strategic exception, then Aave Labs should coordinate with ACI FIRST to justify it with concrete numbers around first-mover advantage and potential long-term upside for the DAO. The 6% MEGA allocation and 30M points are attractive incentives, but they are not revenue.

Based on current assumptions, meeting the $2M revenue floor would require $200M–$400M in active borrows, depending on utilization and interest rates. So is that realistic? Maybe. Maybe not. ACI and other service providers will need to look at the numbers in details.

Deploying v3 on a new chain, especially now with the focus being v4, should ideally involve upfront discussion with ACI and other SPs to ensure assumptions and all expectations are grounded in shared analysis.

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Thanks Aave Labs for reopening this ARFC and providing more clarity around the Day-0 deployment on MegaETH. I’m generally aligned with the proposal and also want to echo the points raised in the earlier discussion.

In addition to that, I would appreciate some clarification on the Revenue Floor implementation (as voted in the recent Snapshot), referring to the previously passed proposal:

[TEMP CHECK] Focussing the Aave V3 Multichain Strategy

Could you clarify whether the agreed Revenue Floor for new deployments is already taken into account for this MegaETH rollout?

A few concrete questions here:

  • Will the Revenue Floor apply from Day 0 on MegaETH?

  • How does Aave Labs envision the payment structure for this specific deployment

As noted previously, it would be strongly preferable that any Revenue Floor payments are settled in GHO or Stablecoins, rather than in native MEGA tokens, to avoid unnecessary treasury exposure and volatility.

Any insight on how these elements are planned or negotiated would be very valuable for the community before moving this ARFC to Snapshot.

Looking forward to your response.

1 Like
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Hello,

@ACI is the elected service provider for this kind of initiative. For the past three years, every DAO-operated V3 instance has leveraged ACI coordination of service providers covered by both the Dolce Vita and Skywards services we are paid to provide.

ACI’s growth work with Megaeth started earlier this year with a first partnership leading to Megaeth supplying the proceeds from their sale (5000 ETH) into Aave V3. This allowed for a very strategic influx of wETH into Aave at a time of peak demand for leveraged staking/restaking, contributing directly to Aave DAO revenue.

Following this, and to reinforce the Aave DAO’s relationship with Megaeth, we published a TEMP CHECK to assess and approve initial demand from Aave Token holders to eventually deploy on this network once it reached maturity:

As Megaeth matured and moved closer to launch, we established a coordination working group with all relevant service providers (@ChaosLabs, @TokenLogic, @bgdlabs). The goal was to define and consider the Megaeth deployment internally and prepare for an ARFC to gauge community support.

Then, a technical-oriented subgroup focused with @bgdlabs was formed a few months ago. Its purpose is to start implementation coordination and prepare for a potential ARFC with relevant assets, compatible with all Risk, Growth, and Protocol Maintainer service providers elected by the DAO to do this work.

While this process was ongoing, we were quite surprised that @AaveLabs decided to bypass all precedence, discarding all ongoing progress to directly reach out to Megaeth. We only learned about their proposal when it was published on the forum.

We were further surprised to learn that an undisclosed deal, based on undisclosed terms, was signed between Aave Labs and the Megaeth Foundation. This was done based on undefined authority, as V3 deployments and growth are not part of Aave Labs’ scope as an elected service provider, nor do they have a mandate to execute this.

After reaching out to the Megaeth team, they have refocused on working with Aave DAO service providers. As a general note, we invite all service providers to focus on their respective scopes and mandates as defined by the Aave DAO.

The ACI is supportive of the Megaeth deployment. We believe it is a strategic opportunity for the Aave DAO, and we keep doing our job to coordinate as we did for the better part of the year with relevant service providers to deliver a timeline, a set of onboarded assets, and associated risk parameters to be considered in a compliant ARFC for the Aave Token holders, who are the bearers of final approval and ultimate authority over this DAO.

9 Likes
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@Nandy.eth the revenue can be generated over a year. But it’s important to say that Megaeth has to accept the floor price of 2m. So whatever revenue they do it either must need to surpass 2m for the DAO or they pay the difference in stablecoins, preferably GHO, just like @phenk53 mentioned.
That way SP costs and revenue are covered.

Although like I said in my comment on the other post that the floor should be 2.5m$…

1 Like
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I don’t like KYC
Kidnap Your Customer if you are in France….

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Hey everyone, want to jump in to raise some important points and also to clarify some of the discussions. Overall it seems that there is interest in the proposal and some healthy discussion has started. The two topics we see are around revenue and second is around the mandate.

Regarding the revenue part it seems that there is support for seeing MegaETH deployment being able to cross the bar of revenue that the deployment could create for the Aave DAO. This is fuelled by the incentives that Aave Labs has been able to negotiate with the MegaETH team. Those who are in doubt, it would be of course difficult to predict any market deployment and each deployment would require careful assessment, which is something that our team has done and of course the final decision remains for the Aave DAO. I am confident that the market is worth it thus going with the Temp Check forward.

Regarding the question about mandates, given Aave is a DAO and anyone can contribute to the actual growth of the protocol by building products or growth initiates, neither such exclusive mandate has been given to one service provider specifically as multiple service providers are doing growth currently. For example, Aave Labs has been participating in growth initiatives over the past years, helping existing DAO service providers with their agreements with partners, by drafting and reviewing agreements to secure deals in terms of commercials before moving into Temp Check state (similar approach has been taken in this particular deployment). A great example is the Kraken Ink deal where Aave Labs worked on the legal side (amongst other things) together with other Aave DAO service providers. Second, there is no undisclosed deal in the sense that the terms are actually written here publicly in the governance forum above for the DAO to decide on. I personally believe that the best value for the Aave DAO and token holders come by ensuring there is a wide range of initiatives led by different teams in a true DAO manner and sufficient collaboration amongst everyone, which in my humble opinion has been the direction of the Aave DAO.

While the processes earlier were ignited earlier regarding the Temp Checks etc, the MegaETH team came to us, explaining that they felt stuck with the process and there was high risk of this deal fleeing into competition. I don’t particularly think one service provider needs to run all the initiatives, in fact, a model where different service providers can push initiatives (Mantle deployment example by TokenLogic) or service providers collaborating together. For this particular deployment I think all SPs will be collaborating in different capacities to achieve the same goal. I also think that focusing on who should work on what dilutes from the big picture which is to grow the protocol and retain substantial market share while the competition is fiercely increasing.

4 Likes
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Given the questions raised, we’d like to clearly outline the process followed, the intent behind our actions, and our involvement in this initiative.

  1. As original contributors to the Aave Protocol and long-term AAVE holders, Aave Labs has engaged, and will continue to engage, in BD efforts that directly benefit the DAO. We have repeatedly supported growth initiatives at our own cost because our incentives are fully aligned with the long-term success of the protocol. We have collaborated and will continue collaborating with the other service providers on these topics, with the goal of maximizing value for the DAO while minimizing overlap and operational overhead.

  2. This includes several instances where we have handled legal or technical coordination on behalf of the DAO without compensation, for example, the Ink agreement, which we did purely to accelerate DAO initiatives and remove execution friction for token holders and service providers.

  3. Regarding MegaETH: they reached out to Aave Labs directly during Token2049 in Singapore after experiencing communication gaps. We engaged because we saw a high-potential opportunity for the DAO that required momentum, and we wanted to ensure the conversation did not stall, especially to avoid a scenario where a competitor could take this opportunity instead of Aave. This engagement did not involve any undisclosed deal: the terms are publicly written in the ARFC above for the DAO to evaluate and decide on. Aave Labs is not compensated by MegaETH, nor affiliated with them (we will adjust the disclaimer accordingly). Our only objective was to support the DAO to capture a valuable opportunity by keeping progress moving.

  4. While MegaETH is not live yet, the level of community interest, token sale participation, and the >$400M pre-deposit event indicate unusually strong early momentum. Based on this, and the incentive structure proposed, we remain confident that the deployment can generate well above $2M/year in protocol revenue, aligning with the DAO’s multichain framework. That said, if the deployment does not meet the $2M requirement over time, we fully support evaluating an orderly off-boarding in line with the DAO’s standards.

  5. Regarding the asset list: after syncing with Chaos Labs, the initial MegaETH deployment will follow the standard canonical approach and include only assets already listed on other Aave deployments and belonging to classes approved under the AAcA. The current target set is: btc.b, WETH, USDT0, wstETH, ezETH, rsETH, USDe, sUSDe. Broader ecosystem tokens (MEGA, USDM-Y, RBT, etc.) are not part of this initial deployment; if the DAO wishes to consider them later, they would go through the standard Temp Check → ARFC → risk review flow. Risk managers will review the canonical asset set at this ARFC stage as usual. No AIP will advance until risk analysis is complete and the community has had time to review. BGD has already begun the technical evaluation of MegaETH’s suitability.

  6. On incentives: Aave Labs does not retain any points, does not manage redemption, and does not receive any compensation from MegaETH. Points must flow through MegaETH’s canonical system due to their sybil controls, multipliers, and compliance structure. Aave Labs’ role is limited to define which protocol actions are eligible to earn points, in collaboration with the other DAO service providers to ensure full alignment. All accrual tracking and redemption occurs exclusively on MegaETH’s side.

We appreciate that ACI is supportive of the deployment, and we look forward to continuing to collaborate closely so the initiative proceeds through the proper DAO process and with full alignment across all service providers.

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Personally while i voted positively to the multichain refocusing tempcheck, i am waiting for the ARFC to see what the strategy around “enforcing a 2M/year revenue floor” will be because the way i see it this is basically unachievable unless the DAO or team behind the network pays it upfront. As you mentioned it will require a certain sustained borrow volume that is essentially impossible to guarantee due to fluctuations in market conditions and required efforts in scaling the network. Ultimately if not managed properly this may lead to missed opportunities in the long term so the pathways for teams aspiring to have Aave on their network must be crystal clear. Requiring a “2M/year revenue floor” just doesnt cut it in my opinion.

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Option 1: You could get into agreement with the team. If legal wise needed a SP could be the counterparty.
And then simply see how the market will do. If revenue is >2m, all fine. If below, Team will pay the DAO the difference.

Option 2: Team will pay upfront, these stables will be deposited into Aave to generate yield. If revenue is above 2m after a year, stables can be withdrawn+ the generated yield. If not, difference will be paid from the deposited stables, yield and the rest goes back to the team.

It’s a bit off topic and should belong to the multichain ARFC but wanted to share my ideas.

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There is the following statement:

I wanted to point that Aave Labs needs to better communicate with service providers. Otherwise it can have negative consequences. An recent example is Ava Labs that have been approched by Aave Labs about the V4 and who decided to paused incentives consequencently to this BD until V4 deployment that is estimated $150.000 weekly incentive miss, specially as

  • v4 deployment in production is not decided yet and yet
  • v4 received audits it’s not ready yet to absorbe V3 liquidity with same security.

It’s important that scope be clear for the partners to improve communication with them and to prevent double voice. It this scenario it’s well more efficient to follow process and if

a bump to SPs is preferable rather that starting a parallel MegaETH discussion that can don’t propose exactly the same setup and who can cause delay / miss understanding

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Aave V4 is going to be live quite soon and the incentive work needs to be started early on as this has been the case. Regarding incentives on Avalanche, specifically we operate on the basis that any incentives that are applied to Aave V4 starts when the protocol is live not colliding with Aave V3 existing incentives and are simply on top of existing programs since these are two separate markets. Regarding communications I would say this is a two way issue, as in some cases we receive no communications in cases where we have partnerships that are based on long standing relationships and have to find out from the partners as second hand information to understand the progress (if any of it is made). That doesn’t make the DAO look good in the eyes of partners, nor does it help to ask the partners to “void” agreements especially when there is overall alignment. Regarding the nudging, that is what we’ve done before and made aware of MegaETH during Singapore. Regardless, I won’t spend time on this topic itself as it doesn’t serve the DAO positively and I am sure that this can be done in a better way in the future.

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This is a bit hard to achieve as there would be very few teams willing to put 2m upfront capital annually for Aave deployment and also on top of that pay for also the chainlink price feeds. What I liked about the multichain proposal is that it allows the DAO to take pre-agreed concentrated bets, but these are still bets, and guaranteeing revenue itself will be difficult to achieve, and if the revenue requirement is shifted to the issuer, unfortunately we would lose market share and opportunity. It’s okay to lose a smaller opportunity but some bets need to be made where there is high conviction.

2 Likes
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I fully agree with this. While the $2M annual revenue floor introduced in the recent multichain strategy TEMP CHECK is a reasonable measure to evaluate and wind down underperforming instances that aren’t contributing meaningful revenue to the DAO, requiring this as an upfront guarantee creates a significant barrier to entry that could backfire strategically. Enforcing this rigidly would likely cause Aave to cede market share to competitors willing to take calculated risks on promising chains.

That said, MegaETH is a clear exception where the risk-reward is obvious. The USDm pre-deposit bridge received $550m in bids in less than an hour, and is arguably the most anticipated L2 launch in years. Being there on Day 0 lets Aave capture early liquidity before competitors arrive. The $2M floor makes sense as a retrospective evaluation tool, not as a barrier that prevents participation in high-conviction launches like this one.

Finally, I believe Aave Labs consistently acts in the best interest of the Aave DAO, and I fully stand behind their judgment on this proposal and therefore I will vote in favor of deployment to MegaETH.

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Thanks for reopening this ARFC and for the added colour from everyone above the MegaETH opportunity is clearly interesting.

I do have a few concerns/questions from that I’d like to see addressed before this moves to Snapshot:

  1. Incentive structure vs Aave alignment

The proposal currently says:

“MegaETH will allocate 6% of the total MEGA supply to a KPI framework defined by the Aave DAO. These tokens are released to MEGA stakers when the protocol reaches the milestones specified by governance.”

A few things here are unclear:

  • Who exactly are the beneficiaries? “MEGA stakers” is much broader than just Aave users. In practice this could end up subsidising general MegaETH growth rather than being tightly tied to Aave revenue.

  • What kind of KPIs are we talking about? If they’re TVL generic chain metrics, Aave takes on the coordination overhead while value leaks to the whole ecosystem. If we do this, I’d rather see very explicit, Aave centric KPIs net interest margin, fee revenue, sustained borrow utilisation, etc.

  • From a tokenomics / optics standpoint, Aave governance effectively deciding how 6% of another chain’s supply is emitted to their stakers is non-trivial. That’s a lot of surface area for misalignment, lobbying, and blame if things go wrong. I’d like to see a clearer model of how this benefits Aave holders specifically, not just MegaETH.

  1. Interaction with the multichain revenue floor

Per the recently passed multichain framework, new deployments are supposed to meet a ~$2–2.5M/year revenue floor or have the chain make up the difference in stablecoins (ideally GHO).

Right now, the ARFC talks about:

  • 30M points

  • 6% of MEGA for KPIs

but those are not revenue. Can Aave Labs clarify:

  • Is the revenue floor explicitly part of the MegaETH agreement, and if so, how is it structured?

  • Are we counting MEGA or “points” towards that floor, or is it strictly protocol cashflow?

  • What realistic borrow / utilisation assumptions get us to that $2M+ number, and over what time horizon?

If this is intended as a strategic exception to the revenue floor, that should be stated clearly and justified numerically, not just implied via incentives.

  1. Scope creep and governance overhead

Between:

  • 30M points

  • A chain-level 6% MEGA KPI pool

  • KYC and redemption on Mega

we’re adding a lot of moving parts that Aave governance will be expected to “own” or at least coordinate. I’d like to see:

  • A concrete governance process for how KPIs are proposed, updated and sunset.

  • Clarity on who actually runs the emissions playbook so this doesn’t become an unbounded time sink for the DAO.

I’m not opposed to a MegaETH deployment but given the size of the incentive package and the new multichain strategy, I think we need much sharper answers on:

  • How the 6% MEGA KPI pool is constrained to outcomes that directly improve Aave’s PnL

  • How the revenue floor is enforced in stable terms, not just narrative and points

  • How we avoid setting a precedent where Aave becomes the default growth arm for every new L2 in exchange for non cash incentives

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Dear Aave DAO,

We appreciate the ongoing discussion regarding a potential Aave deployment on MegaETH. We are currently working with Aave DAO service providers to shape an optimal proposal, aligned with the governance framework and established practices of the DAO.

Best regards,

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Hey everyone, it seems that the main point raised by the community is guaranteeing the $2M revenue floor.

Aave Labs met with the MegaETH team yesterday and is working with @namik and the team to refine the proposal so that this is properly addressed and aligned. The MegaETH team has already expressed their willingness to commit to this guarantee over multiple years, establishing a solid long-term foundation between Aave and MegaETH.

We will keep the community closely updated as this discussion progresses.

4 Likes