[ARFC]: Deploy aCRV & CRV to veCRV

Hi @MarcZeller,

Aave risks incurring significant slippage upon unwinding the sdCRV position in current conditions and there is no peg which means the spot price could deteriorate further. If Aave earns yield over a given time period, there is the potential for a significant portion of that yield to be lost to slippage when swapping back to CRV. It is important to note there is a minimum hold period for Aave to offset the slippage costs when unwinding the strategy. This acts to introduce a minimum holding duration just to break even without considering the administrative overhead in facilitating any AIPs.

Given the effort of @AaveLabs investment in staked aToken and Aave already incurring auditing expenses, it makes sense to have the ability to hold veCRV and use it to boost Curve Finance Liquidity Positions on a Aave v3 AMM deployment. We may not need veCRV now for this purpose, but it certainly makes sense to have this flexibility in the near future given staked aToken is in line behind the stkAAVE upgrade audit. If we are optimistic about when stake aTokens can be implemented, reverting back to CRV at a later date may be hindered by the breakeven payback period of holding sdCRV when considering the price impact when unwinding the strategy.

There are also considerations for GHO, launching soon, whereby Aave could create a new Aave v3 aToken pool on Curve Finance. No doubt, there are Aave investors who will support this pool, as there are users voting for the exisiting Aave v2 pool. Perhaps aUSDC, aDAI and GHO.

It would be good to discuss these potential use cases in the context of sdCRV (or st-yCRV) and if Aave wants to revert to CRV then veCRV to support GHO or staked aToken options at a later date. Given the time to progress through governance, the current status of GHO and staked aTokens, we might find ourselves only holding st-yCRV or sdCRV for a short period of time. This would be a sub optimal outcome for Aave given the slippage upon exiting the strategy.

In my honest opinion, it is not wise for Aave to rely on third parties support for boost or optimising the CRV holding when there is no enforceable manner (legal or smart) that creates accountability. Circumstances can change, outside of anyone’s control, which means any third party support comes with risk that despite best intentions, future events can change from what we intend now. This is my main concern when relying on third party support.

It is natural for investors in Stake DAO and Aave to try align the two communities, there are mutual benefits here. I am not sure about how ACI or Emilio intends to approach the Snapshot vote, I’ll let you both decide and trust your judgement.

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It should be reminded that the alternative is to lock the CRV for 4 year and periodically relock with no opportunity of “exiting” the position.

The Aave DAO is not here to “trade”, And to my understanding, the aim is to maximize the benefit of current & future CRV holdings.

In terms of benefits, with StakeDAO Boosted votes the DAO ends up with 1.01M VeCRV votes instead of maximum 630k Votes of current holdings.

With current commitments from the community of veSDT delegated boost, if the CRV holdings of the DAO would be higher, there’s a significant buffer offering the DAO max boost.

in terms of Yield the “max boost” of StakeDAO is significantly higher than any other options.

The ACI support benefits both Aave DAO & StakeDAO ecosystems, as an example of our ecosystem synergies, incentives are aligned at the benefit of both parties.

the ACI will obviously vote accordingly and will respect the governance if veCRV option is chosen, if that’s the case, we’ll just make some decent yield with our veSDT on warden as @Dydymoon suggested :smiley: .

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Thanks for your answer, I will try to go through all points as precisely as possible.

When comparing the yield strategies, you might have overlooked Concentrator: from a pure yield perspective, it is currently undefeatable, standing at 75% APR rn.

This point is not valid imho. If you enter and then exit, you end up with the same amount (minus trading fees of 0.04% in and out). You cannot sell sdCRV if you don’t have any, so this 41k is very theoretical. Besides that, sdCRV has the best historic of peg maintenance, and you can check it on defiwars. This is due to its design, where every single action is turned towards peg maintenance.
image

sdCRV has the best liquidity as a proportion of its total supply : CRV in the liquidity pool represent 5.9%, similar to yCRV which you are considering (5.9% as well). Its liquidity was rather around 9-11% historically, and is currently slightly lower than usual due to take profits on CRV’s strong performance recently.
Finally, as Aave is aiming to get a long term position on Curve, and is willing to potentially lock for 4 years, not sure this immediate liquidity question is the most important with regards to what you are trying to achieve. Again, since you are considering yCRV, I don’t anticipate sdCRV liquidity to be an issue.

As explained very well by C2tp, with 630k veCRV Aave won’t be able to significantly boost their PoL, and certainly not boost it more than the boost they would have staking their LP through Convex (289m veCRV), Yearn (47m veCRV) or Stake DAO (25m veCRV) and certainly not exceed their CVX or SDT incentives. However, with the 1.57x voting power boost that Aave would get with boosted sdCRV, and staking their LP through aggregators, Aave could get double boost: 1.57x boost on total incentives sent to Aave’s pool + up to 2.5x boost on LP. There is no way this can be less interesting from a pure economic perspective. Happy to run further maths to have a more precise comparison, would just need the expected PoL for that.

sdCRV indeed requires voting for gauge votes every other week. This vote can be delegated to an EoA which can do it in a very easy gasless fashion. It will allow Aave to adjust their votes frequently which is generally needed when you have several pool to incentivise, without passing several transactions. However, sdCRV does not require increasing the lock duration every week to maintain full voting power (which needs an onchain transaction, and btw delays the perspective of an exit, which seems to be an important consideration).

Aave wouldn’t hold any veSDT, so this would not be a problem. However, good to see that you agree with me on the value of liquid wrappers! :grinning:

This is true for governance votes, but not for gauge votes. Besides, Aave is here for the long term :slight_smile:

As mentioned, several veSDT & Aave holders would be happy to delegate their veSDT boost so that Aave can benefit from a 1.57x boost instead of having a discount on their voting power. Therefore Aave could get max boost without buying any SDT. It could just farm them to be in position to boost its position without community support after one year.

Thanks for making those very interesting points, happy to answer any further questions! :slight_smile:

btw, on this, please note that the veSDT boost Aave will receive will also be able to boost Aave’s BAL holdings. Two birds with one stone :wink:

Thanks for this very valuable comment Dydy. It’s precisely because I know that Aave would probably prefer to vote rather than benefit from bribes that I singled out the bribe APR from sdCRV yield. If Aave chooses to go the “governance way”, the good APR to look at is indeed the one without bribes. If Aave prefers the yield way though, the bribe APR becomes relevant. And as you said, it could also be added to veCRV, it’s a good point.

If really what you look for is the yield, I advise looking into concentrator which has crazy good yields for CRV.

Not an issue since Aave wouldn’t have a veSDT lock.

It’s not for free since it benefits Aave. Any Aave holders could actually delegate their veSDT boost to Aave since it will benefit Aave massively to be able to support its liquidity for GHO in the most efficient way possible.

Marc and Julien answered better, but yes, the objective is to maintain max boost for 1 year.

Really glad to see Aave finally diving into Curve. It’s especially timey as GHO’s release approaches. There’s a lot of choice on what could Aave do with its CRV and we are not here to promote any of them, we (Paladin) have also played a lot with most lockers, and like them all. Just want to point out that this is inaccurate to our knowledge, there is indeed a TWAP on gauge votes:

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If you’re doing this for 1 year, this is more of a trade like @MarcZeller pointed out Aave does not want to do. At the end of the year you’ll have to exit via the peg or purchase the $SDT if you want to switch strategies.

Locking is not a short term play.

That’s why with yCRV at the end of a year if you want to switch the strategy to vl, you can do that without relying on a peg or external incentives.

We do think you should go with a yield option.

So your choices are:

  1. 39.34% with yCRV. Ability to change strategy from yield to voting penalty free.
  2. 52.7% for year 1 voting via snapshot every 2 weeks, then purchase $150k in SDT in year 2, or exit the position via peg and pick another strategy.
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no no, please double check, no twavp on gauge votes

We indeed checked, and for the last “Gauge vote - CRV” on the sdcrv.eth Snapshot Space, you use the same 2 Strategies that are used for all the other votes (see current active vote & last gauge vote):
sd-vote-boost & delegation
So either you have TWAVP on both votes, either you don’t have it on any vote.
And since another Strategy called sd-vote-boost-twavp in the list of Snapshot Strategies, which seems to be the new version for the TWAVP vote counting strategy before the release of veBoost, this would mean you’re not having TWAVP anymore on the Curve Governance votes (which is then an issue to discuss on the Curve Governance forum, not here).

Please double check your own settings before telling us to double check it :grin:

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idea is that in 1 year, aave will have farmed enough to either build its own veSDT bag, or buy long term boost on warden.

If you just want the yield asdCRV is a better option than ycrv.

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it’s exactly that, we created two separate gov spaces for asdcrv integration. sdcrv.eth: gauge votes, no twavp. sdcrv-gov.eth: governance vote, with twavp. it’s fairly recent, bot is in the process of being migrated.

Yet no vote is active on sdcrv-gov.eth, and current active ones still use the sd-vote-boost strategy.
Not going after what you guys are planning to do, just making clear on the current setup so everybody in this discussion has the correct informations.

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Love the passion of this discussion, and seeing Paladin friends jump in

Welcome @Hubert, thanks for pushing the StakeDAO option along by comparing it to others.

@MarcZeller while it is impossible to deny your commitment to Aave and its community, there has been concern about a potential conflict of interest due to you (and Emilio) being investors in StakeDAO.

Could you comment on the validity of these concerns?

There is still merit in the sdCRV option but important information to know before voting.

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The amount of votes was not mentioned on the table, but thanks for the information.
This is an impressive amount, however we’re missing information here.

When these tokens have been locked ? Would it be possible for each of you to confirm their intention to frequently relock during the full year to keep the maximum boost?

Based upon the analysis provided, it appears Hubert’s analysis is assuming there are bribes on Aave pools or voting on other pools to generate yield, which is not the case.

This delegation is a nice offer, is it coming in addition to the ACI one ?

Same as Marc, can you share the addresses where the veSDT of potential lockers interested to delegate are held and let the DAO know if the intention is to periodically re lock during the year to maintain the max voting power ?

During the first year, Aave might earn 52.7% in yield but only its voting for pools bribed instead of Aave ones, or creating bribes for the Aave pools.

Also, unless each veSDT delegator frequently relocks, what happens after 1 year ?
If the delegation falls away, for whatever reason, The DAO wouldn’t get anymore delegations and the voting power would fall below 0.64:1, leading to either leave the strategy or buy & lock SDT.

As mentioned Matthew, exiting the strategy will create a lot of slippage which will happen as Stake Investors won’t just boost the Aave DAO forever.

The biggest risk are the sdCRV peg & liquidity, and this risk is beyond Aave’s control. The slippage could be a lot more in the future (not mentioning the last sdveCRV wrapper which completely depegged and required migration to sdCRV), but warnings are ignored and affirmations on the forum are not verified so lets double check:


Fully agree on this point, the issue is that sdCRV is maximizing for the short term,but not for the long term as the delegation would not last forever. We believe veCRV is a better long term option for Aave.

While it’s quite comfortable to lock veCRV forever as it’s the underlying asset, holding veSDT forever is another level of discussions and considerations, yet this seems to be the next step of your strategy if the plan is to still deposit on stake after the first year while maintaining max boost.

This is only true for the first year, and assuming that:

  • All address delegating are frequently relocking their veSDT
  • Aave does not acquire anymore CRV requiring a veSDT max boost increase

(To be clear, not accumulating more CRV is not possible as the holdings increase over time from the collector contracts, which would require veSDT holding or delegation to grow with it.)

As mentioned, happy to know all these veSDT holders and their holdings to be sure that they are actually interested in delegating and constantly relocking.

Well, this is quite interesting that you think you know something that wasn’t discussed or voted on by the DAO.

Can any details of other business interests being discussed in private challenges be shared here. This is an important context if other initiatives are to emerge in the future, and it will help consideration like GHO and staked aTokens, as well as how the strategic voting power would be affected depending on this vote outcome.

I think we made it quite clear that we’re not looking for yield, but governance influence…

Neither Marc, Julien, Emilio nor any other delegator confirmed frequent re locking so far. Some confirmed delegating, but it is the first time that frequent re lock is mentioned.

It’s good to know, but could every interested delegator personally share their intention to frequently relock, to be sure nobidy plans to delegate a decreasing position which would modify the full strategy.

Giving some more insight on this point:

A few months ago, the Paladin DAO voted to deploy CRV to sdCRV from its treasury after a similar discussion, and without holding any veSDT because it was for a short period of time.

However, even after the TWAVP was over, the veCRV voting power never exceeded 0.75:1, and went below 0.6:1 at some point, with an average between x0.6 & x0.65:1

(Btw, it’s also important to mention that 0.64 is not the minimum, as it can go up to 0.4:1 if everyone else is max locked.)

Finally the DAO voted to migrate to st-yCRV but has been partially stuck because, while the position is 10x smaller than the Aave one, the sdCRV liquidity is not always good enough to exit with acceptable slippage.

This is most likely not true because again, most of the calculated yield comes from inexisting bribes but also because even assuming that Aave would sufficient SDT to cover the max boost with current holdings, there is no way to know how big the CRV holdings will be, or how much veSDT will be required to max boost at this time.

Anyway, we strongly encourage Aave stakeholders to take a long term view, to understand the sdToken mechanism as well as the exit risk and potential strategy updates. The dependency upon delegated support is something Aave needs to consider and also weigh up the potential impacts.

While this is a nice initiative, I agree with Matthew that it creates a huge dependency on external parties, which is obviously not sustainable in the long run.
The Aave DAO should not rely on external contributors for its veCRV voting power or any other strategic asset.

As a StkAAVE stakeholder, I’m strongly against the sdCRV option for the reasons explained above.

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Hey fig, great governance is when there’s a bit of debate. current convo is a testament on Aave not being monolithic but actually a exciting collaborative work of multiple parties.

Well, I’m an investor in half the ecosystem so obviously I have personal interest in basically anything that adopt the ERC-20 standard lol.

my policy is quite simple on that: Transparency.

My addresses are fully public, I’m so far, the only delegate that does active disclaimer on every ARC/AFRC done by ACI, and my track-record speak for my implication of putting Aave first for the past 3 years.

As a reminder, in the current discussion, I’m actually making less money supporting the Aave DAO by delegating the veSDT boost.
My veSDT is not liquid for the next 4 years (and I plan to restake every other week for max efficiency) so there’s no short or mid-term expectation of personal profit from this.

The proposition is good for the Aave DAO, and compliant with my delegate platform (see Treasury efficiency) section.

therefore there’s no issue with this proposal in my view and the ACI will be comfy voting for this proposal.

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Cool, thanks for the clarity here.

The transparency in this ARC and others seems to dispel concerns of malice.

We see the option to use StakeDAO as an efficient and flexible (without a lockup), so excited to see this conversation progress. There are other pros of veCRV too - such as automated voting and less slippage.

(Slippage feels like a nominal concern at this moment as liquidity can build / shrink)

Additionally, as pointed out by other contributors - veCRV seems to have less counter-party risk


To summarize (as it feels like it has been lost in the discussion), the community must decide what to do with CRV sitting idle in Aave’s treasury.

It sounds like the DAO must decide between two paths forward:

  1. Optimize for yield and flexibility
  2. Optimize for governance control and security

Should be a fun one!

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To be sure, 1. is st-yCRV and 2. is sdCRV or veCRV ?

I think you meant :

  1. Optimize for yield and flexibility → st-yCRV
  2. Optimize for governance and emissons control for GHO (or yield as AAVE prefers) and flexibility → sdCRV
  3. Optimize for security and governance control but locked at least 4 years → veCRV
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Hi,

Opinion
While all the options presented are novel in their own right (in my opinion) Aave should choose the least risky option: there should be no involvement of multisig-controlled governance via snapshot.

Reasoning
If Governance is the focus, choosing any option (including CVX, sdCRV and others) is too risky. veCRV is the best option here.

If yield is the focus: delegating all that governance power away to cvxCRV, yCRV is the same as giving it away to a multisig.

Now, if that is within the DAO’s risk appetite, then it’s all good. But to minimise risk, choosing the most credibly neutral option (veCRV) is in Aave’s best (short-term) interests. When veCRV alternatives are more reliable (the respective teams are working hard towards finding the best solution to decentralise their veCRV framework away from a multisig), one may choose the one that offers the most bang for the buck (either yield or governance).

Benefits of choosing veCRV over its derivatives (incentivising GHO)
The benefit of choosing veCRV (for the time being) is that the DAO can simply lock a vote for their GHO stablecoin pool (should they choose to incentivise it) in a set-it-and-forget-it manner, with occasional re-locking of unlocked CRV. With multisig style veCRV derivatives, one would need to periodically vote. This is cumbersome if you already know what you want to incentivise (your GHO stablecoin pools).

Final Thoughts
Of course I mean no disrespect to any team that does veCRV derivatives (since I hold them myself and I am a very happy user of their work). But I do think as a DAO as important as Aave, relying on multisig-style snapshot governance can attract unwanted risks (counterparty for sure, but also perhaps reg risk in the future).

I hope the DAO makes the best choice that helps them the best with the roll out of their highly anticipated GHO stablecoin!

With regards,
Fiddy.

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Hey everyone,

Quick update on this with some good news for sdCRV:
1/ sdCRV is fully repegged (as expected):

2/ sdCRV meta governance is moving on-chain: this means that the voting experience of sdCRV will be the same as for veCRV. Aave will be able to vote once for its gauges and won’t need to vote every other week, which answers the main concern raised by Dydy and Llamaxyz. Using sdCRV, Aave will be able to vote for its chosen gauges with boosted voting power, without the need to increase lock or vote every other week, thus minimizing the amount of transactions required.

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Pro & Cons of each option for CRV holdings

At the time of writing, Aaveholds 696K units of CRV. This post will recap the different options discussed:

veCRV - Lowest risk, governance and direct control CRV emissions
st-yCRV - High yield, no CRV emission influence and exit liquidity risk
sdCRV - High yield, proportional CRV emission influence and exit liquidity risk

veCRV

Aave is to gain direct governance influence, minimize risk and gain influence on gauge weights to generate external incentives. This option is not optimized for ROI or yield which introduces additional smart contract risk. Llama recommends the veCRV option.

Pros

  • Gauge weight power (Influence on CRV weekly emission)

By locking it 4 years and relocking periodically to get the max voting power, the DAO would be able to redirect 0.0068 CRV/veCRV on the pools of its choice (Most likely directed to a GHO one)

With the current emission (reduced every year by 15%) the DAO would control 4,740 CRV of emission per week, representing $234.13K per year obtained without any additional expenses.

  • Protocol fees (Profit sharing in 3CRV Stable pool)

50% of all protocol fees on Curve are directed to LPs, and the other 50% goes to veCRV holders. The current APR is 3,43% which is representative of the usual economic activity. With regular volumes, the APR is close to 2-5%, but weeks like USDC depeg, the APR was 15%.
No extra counterparty risk (No protocol on top of Curve)

Unlike the two other options, the CRV will be locked on Curve directly from the Collector contract. This reduces the risks compared to using protocols on top of Curve which adds an additional layer of smart contract counterparty risks.

  • Easy management of the veCRV position & votes

Re-locking the veCRV position can be made accessible, via adding a function on the Collector Contract. Llama can then create a bot which automatically calls the function and re-commits the veCRV holding.
The veCRV option only requires to lock CRV, no extra token required.

When a gauge vote is submitted on Curve, there is no need to revote each week even if the position is increased, unless Aave decides to change the vote.

  • Additional features from holding veCRV

Governance Power to participate in the DAO decisions (On-Chain)

veBoost which can be sold or utilized to maximize the rewards on the funds deposited: While we agree that the impact will be minimal at first, the veBoost will grow over time with the veCRV holdings, compared to both other solutions where it is lost.

Cons

  • 4 unlock period with frequent relock to keep the max voting power

The goal of this strategy is to always relock to have the maximum voting power, and increase the position over time with the CRV earned. If Aave decides to stop this strategy at a later stage, the same amount of CRV that was locked will be available after 4 years.

Llama can automate the relock periodically to avoid the decay.

  • Complex participation in DAO decisions

Governance participation can be challenging with the collector contract because of the important amount of DAO decisions voted, and there is no way to delegate the veCRV governance power.

st-yCRV

This option was proposed by Llama as an alternative to veCRV in case Aave preferred maximizing the yield, with the intention of accumulating CRV and gaining additional voting power for a later date.

This option does not offer any governance influence which leads to an easier management.

However, considering the recent events such as USDC de-peg and Euler hack which impacted many protocols, Llama believes that security should be prioritized and Aave should proceed with the lowest risk proposal.

Pros

  • Gauge weight power profits (Influence on CRV weekly emission)

While it’s not possible to directly vote with st-yCRV, Yearn utilizes the voting power to vote for the highest vote incentives on the market, then sells everything for CRV and compounds the strategy overtime.

  • Boosted protocol fees profits (Profit sharing in 3CRV Stable pool)

Yearn utilize its veCRV holdings to boost the distribution of the 3CRV (Currently 1.66x)
All 3CRV are collected, sold for CRV and compounded overtime.

  • Temporary MegaBoost in CRV

As mentioned earlier in this thread, Yearn decided to distribute 30k CRV/Week for a defined amount of time to maximize the yield. These CRV are also compounded in the strategy. Unless the decision is renewed, this should not be taken into account as the initial incentives should end soon.

  • Easy management of the CRV position

Requires a deposit & stake to enter the strategy. The yield sources are collected in, or sold for CRV which are automatically compounded in st-yCRV. No further action is required by Aave post-staking yCRV.

Total current APR: 33%

  • Transferable Asset (yCRV)

When CRV are deposited on Yearn, it is periodically relocked as veCRV, but the protocol mint yCRV at 1:1. These yCRV can be staked for st-yCRV and transferred or sold on the yCRV-CRV pool on Curve.

Cons

No direct governance influence**

All the gauge weight power and 3CRV are sold for CRV, and the governance power and veBoost are kept by Yearn.

Extra counterparty risk (Yearn on top of Curve)**

This solution adds extra smart contract and counterparty risks as required to trust Yearn as a good manager of the strategy.

High risk asset profile (Depeg risk)**

The yCRV is transferable, but the liquidity remains limited: $8.4M.

With the current Aave holdings and yCRV liquidity, it would be possible to exchange 680k yCRV with a rate of 0.9936:1.

However, any selling pressure on the yCRV could lead to Aave incurring significant slippage when trying to exit the position.

sdCRV

sdCRV was proposed by the Stake DAO team in the comments, and presents as an hybrid solution between maximizing yield and governance influence. However, it requires veSDT holdings or boost delegation to Aave to be considered efficient compared to other solutions.

Until recently, the voting power on sdCRV was acquired progressively over a 30 day period. Stake DAO mentioned a parameter change related to asdcrv, but we couldn’t find any vote or public announcement about this update. However, even after this period, the voting power of 1 sdCRV was not equal to 1 veCRV if Aave does not lock SDT itself or receive delegation from veSDT holders.

Pros

  • Proportional gauge weight power (Influence on CRV weekly emission)

By depositing 696k CRV on Stake, it would result in a voting power of 0.61 veCRV vote / sdCRV. With the current emission (reduced every year by 15%) the Aave would control 2,891 CRV of emission per week, representing $142.80K per year obtained without any additional expenses or veSDT boost holdings or delegation.

To avoid a SDT acquisition and reduced voting power, Marc Zeller from ACI is to delegate all his veSDT voting power (270k) to Aave for one year, as well as relocking & re-delegating every week enabling Aave to retain the provided boost.

Other parties mentioned on the forum said that they consider to delegate, but no one other than ACI confirmed that they will delegate, relock & redelegate frequently or disclosed their holdings to track the delegation, so it’s not taken into account in this recap.

According to AaveChan engagement, the veSDT holding delegation would boost the voting power to 1.14x for 1 year.

With the current emission (reduced every year by 15%) the DAO would control 5,403 CRV of emission per week, representing $266.9K per year obtained with 270k veSDT boost delegated. However, as soon as the delegation is over, the voting power will be back to 0.61x.

  • Proportional protocol fees (Profit sharing in 3CRV Stable pool)

Same as on Curve, the 3CRV fees are distributed to sdCRV stakers.

  • Transferable Asset (sdCRV)

When CRV are deposited on Stake DAO, it is periodically relocked as veCRV, but the protocol mint sdCRV at 1:1. These sdCRV can be staked for sdCRV-gauge, transferred or sold on the sdCRV-CRV pool on Curve.

Additionally, the Stake DAO team communicated that the votes now operate like veCRV. Please note, Llama has not been able to publicly find this announcement beyond this forum thread.

Cons

  • Extra counterparty risk (Stake on top of Curve)

This solution adds extra smart contracts risks, similar to st-yCRV with additional counterparty risk through reliance on ACI and/or others to provide delegated veSDT support. This veSDT support requires weekly relock and redelegation to avoid impacting the boost.

As Aave’s CRV continues to grow in line with Aave revenue, additional veSDT delegation will be required to maintain the maximum boost. Llama does not question ACI’s dedication to Aave. After the initial committed 1 year period, Aave will receive reduced voting power if an alternative veSDT delegate is not found.

  • High risk asset profile (Depeg risk)

The sdCRV is transferable, but the liquidity remains limited: $3.8M.

With the current Aave holdings and liquidity, it would be possible to exchange 680k sdCRV with a rate of 0.9826:1.

  • Management of the rewards

Considering that Aave will vote for pools with no vote incentives have decided on the Curve pools, Aave would not earn part of the yield disclosed on the UI.

Moreover, all rewards from vote incentives are sold for SDT and distributed. If Aave is to accumulate a CRV holding over time, the SDT tokens would need to be swapped to CRV.

  • No veBoost (Kept by Stake DAO)

Same as Yearn, Stake DAO would keep the veBoost to maximize the yield on their strategies.

Next Step

Llama will be creating a Snapshot vote presenting the following options to the community:

YAE - veCRV
YAE - st-yCRV
YAE - sdCRV
NAE
ABSTAIN

We expect the Snapshot to go live 27th March 2023.

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