ARFC updated to add Fluid addresses and specific details 2024-11-29
Summary
This ARFC proposes a strategic partnership between Aave DAO and Instadapp through a $4M investment in $INST tokens at a 350M FDV, aiming to strengthen collaboration and alignment between both protocols. This is a Direct to AIP Proposal.
Motivation
Instadapp has been a long-standing partner in the Aave ecosystem, providing valuable infrastructure and user interfaces. Their upcoming tokenomics reform and rebranding present an opportunity for deeper strategic alignment.
The partnership would benefit both protocols by:
Strengthening the relationship between two major DeFi protocols
Supporting GHO adoption through Fluid integration
Ensuring priority support for Aave protocol integrations
Creating mutual value through governance participation
Specification
The proposal includes the following key components:
Aave DAO will become a launch partner for Instadapp’s new tokenomics and rebranding. The DAO and service providers will implement a strict standard of non-hostility policy regarding Instadapp products and team members in public communications. The DAO will also provision of support and promotion for Instadapp products that leverage the Aave protocol including GHO and Fluid integrations. This will involve priority and tailored support for Instadapp team integrations including the provision of free flashloans to the Instadapp protocol.
To further alignemnt between the two protocols, we propose a purchase of $4M worth of $INST tokens using GHO (approximately 1% of total supply at 350M FDV)
With these tokens Aave DAO will allocate up to 1/3 of acquired INST tokens to support GHO pairs on Fluid via Merit. The rest of the tokens will be set to a one-year vesting period for with delegation to Aave Protocol Embassy for active participation in Fluid governance.
Considering the time sensitive nature of the transaction, this proposal can proceed in a direct-to-AIP vote that will allow for the following:
Allocation of $4m GHO from the treasury for purchase of $INST tokens
AIP to whitelist InstaDapp to flash loans
Fluid Whitelist Address for Flashloans is 0x352423e2fA5D5c99343d371C9e3bC56C87723Cc7
Instadapp treasury: 0x28849D2b63fA8D361e5fc15cB8aBB13019884d09 (origin of $INST tokens) -
Transfer amounts: 4M $GHO, 1.145M $INST
Disclamer
Some members of the ACI team own $INST tokens acquired on secondary markets and use instadapp products.
The ACI is a candidate to participate in Instadapp governance directly (via acquired tokens) and via the Aave protocol Embassy (APE) to support Aave synergies in the Instadapp ecosystem.
Next Steps
Collection of community feedback during the ARFC phase.
If feedback is positive, implement formal AIP for on-chain execution.
Supportive, instead of fighting we should be building bridges and work together and use the synergies created to benefit each other but especially all user.
Out of curiosity, is Instadapp/Fluid also considering buying Aave token to take part in Aaves governance?
I think could be great idea to turn it into token swap, to some sense that also would work for InstaDapp/Fluid. Overall supportive for creating more synergies between InstaDapp/Fluid and Aave, inc. the alignment deal.
Supportive of more synergies and symbiotic relationships!
However
Considering the time sensitive nature of the transaction, this proposal can proceed in a direct-to-AIP vote that will allow for the following:
Why is it time sensitive? I’m a stickler for details and I don’t think this aligns to the specifications of ‘direct to AIP’ process (i.e. it is using treasury funds + adding new flash borrowers, not setting protocol params). Therefore it shouldn’t be a ‘direct to AIP’.
I have nothing against the spirit of the ARFC, my concern is that governance processes should be strictly followed unless in exceptional circumstances (e.g. security reasons), since the community has certain expectations of governance process. If certain steps are skipped or previously agreed processes are not followed then it may undermine the trust in the governance process/framework. In a broader context, not having a tightly followed governance process can open up the governance attack surface.
LlamaRisk has identified some points about the proposed transaction that would benefit from further clarity.
The transaction details are not fully explained, specifically the marketplace and identity of the seller from whom INST tokens would be bought (if it’s not a standard market transaction). Important to note is the possible direct dealing with Instadapp DAO, which adds complexity since there is no officially established legal entity to handle such transactions.
Regarding the mentioned tokenomics updates, we suggest being careful about any changes in INST distribution, use, and governance that might draw unwanted regulatory attention. We believe that ACI/Aave protocol Embassy (APE)'s active role in governance offers a chance to shape protocol development and implementation of risk mitigation mechanisms.
With the September Funding Update in the final stages of review, this proposal, once executed, is expected to acquire approximately 4M GHO from spot markets. Originally allocated for other purposes, the GHO can be reallocated to support the INST acquisition.
When submitting the INST acquisition AIP, GHO from the Treasury can be used to complete the transaction. To ensure the DAO remains adequately funded, the INST acquisition AIP should be submitted after the September Funding AIP.
Upon receiving GHO, we encourage InstadApp to deploy it into Fluid and provide liquidity for users. Any liquidity mining rewards provided by the Aave Liquidity Committee or Aave DAO via Merit, should be claimed and redistributed to users in the subsequent emission round, ensuring all incentive emissions are effectively directed to users.
Saucy Block strongly supports making strategic investments in $INST Token.
However, we oppose allocating 1/3 of acquired $INST tokens as incentive costs through Merit. If the goal is to enhance GHO’s stability, we recommend the following alternative approaches:
GLC secure non-INST assets from Aave DAO Treasury as additional buget
Launch INST/GHO Pool on Fluid DEX as Protocol-Owned Liquidity (POL) in collaboration with Instadapp.