[ARFC] GHO Stewards


title: [ARFC] GHO Stewards
author: @karpatkey_TokenLogic
created: 2024-01-30


Summary

This publication proposes to creating the GHO Stewards and granting the GHO Stewards permission to adjust the following parameters:

  1. GHO Borrow Cap
  2. GHO Borrow Rate
  3. GSM Exposure Cap
  4. GSM Bucket Capacity
  5. GSM Price Strategy
  6. GSM Fee Strategy
  7. GSM Price Range (Freeze, Unfreeze)

GHO Stewards consists of members from Growth (ACI), Risk (ChaosLabs and Gauntlet) and Finance (TokenLogic + karpatkey) Service Providers and utilise a 3 of 4 multi-sig.

Motivation

Introduction

With the launch of stkGHO, the GHO price has improved significantly.

Screenshot 2024-01-30 at 20.31.36
Source: TokenLogic

In preparation for the possibility that GHO trades above peg, this proposal enables a select group of 4 Service Providers to adjust several key parameters affecting GHO’s ability to grow in a safe manner that maintains the peg.

With representation from all the major facets supporting GHO, this group ensures Risk, Growth and Liquidity provisions are all considered when amending the GHO Borrow Cap.

Implementation of this proposal enables further streamlining of governance by enabling several GHO related parameters to be adjusted in synchronised harmony with prevailing market conditions.

Borrow Cap

With the current Borrow Cap reached and GHO trading closer to peg, there is a risk of limited capacity for the market to react to an over-peg scenario. Users would be unable to mint GHO and arbitrage the price back to $1 (mint 1 GHO and swap >$1).

With many liquidity pools to be created and rewards distributed across, it is important the DAO can swiftly increase the GHO Borrow Cap to mitigate GHO trading above $1. The GHO Stewards will be able to increase the GHO Borrow Cap swiftly to mitigate GHO trading above peg. The GHO Stewards can increase the GHO Borrow Cap up to a threshold of 50M units.

Borrow Rate

The GHO Stewards will replace ACI’s ability granted via AIP-381 and will implement the Borrow Cap adjustment via an admin role without needing to push an AIP to vote.

The Borrow Rate is to be adjusted gradually to enable the ecosystem to expand in a safe way. The criteria is outline below:

If the trailing 30 day average price of GHO stays outside a $0.995$1.005 price range, the GHO Stewards are able adjust the Borrow Rate no more than 100bps per 7 day period, up to a maximum 9.5% APR.

GSM Parameters

Details on each of the GSM features can be found here on the governance forum and here on Github. In short, the GHO Steward can customise the GSM parameters to suit prevailing market conditions.

Specification

GHO Stewards will consist of the following Service Providers:

The GHO Stewards will determine if and how much to adjust the following:

  1. GHO Borrow Cap (up to a maximum of 50M units)
  2. GHO Borrow Rate
  3. GSM Exposure Cap
  4. GSM Bucket Capacity
  5. GSM Price Strategy
  6. GSM Fee Strategy
  7. GSM Price Range (Freeze, Unfreeze)

Decisions are made when 3 of 4 above are in agreement whereby @karpatkey_TokenLogic will be using a nested multi-sig (2 of 2).

@karpatkey_TokenLogic will gladly share these decisions and their rationale in this thread.

Disclaimer

TokenLogic and karpatkey receive no payment for this proposal. TokenLogic and karpatkey are both delegates within the Aave community.

Copyright

Copyright and related rights waived via CC0.

7 Likes

Supporting the GHO stewards. GHO needs to be tracked closely now that it is at peg and has to stay there. Thus there needs to be some entity watching it closely and making decisions to let it grow.

2 Likes

This proposal has been escalated to ARFC Snapshot.

The vote will start in a few hours. Thank you for your support.

1 Like

Following snapshot monitoring, the following ARFC Snapshot passed on 2024-02-09, with both quorum and YAE as winning option with 574K votes.

After discussing with related service providers, especially risk teams, GHO Stewards reached a consensus regarding parameters.

The GHO Stewards parameters are set as follow:

  1. GHO Aave Bucket Capacity: 100% increase
  2. GHO Borrow Rate: 0.5% increase
  3. GSM Exposure Cap: 100% increase
  4. GSM Bucket Capacity: 100% increase
  5. GSM Price Strategy:
  6. GSM Fee Strategy: + 0.5%
  7. GSM Price Range (Freeze, Unfreeze)
2 Likes

Are there actually meeting notes for the decision? I would love to learn more about the reasoning…

How do we plan to hold the peg, while 35 dump is coming in? Will we have sufficient capa for incentives to motivate others buying the GHO?

Following the community consensus on the risk steward next steps here, we are offboarding from the GHO Stewards and invite the community to decide on a replacement signer.

Hello,

Following Aave DAO service providers discussions, and GHO steward technical review, we realized the @ACI was unclear on several points of this ARFC:

While it’s very likely the steward will only need to increase BR for GHO in the coming weeks and months, the initial intent was to allow for more future-proof parameters and allow this change to happen both ways to react to market evolution.

GHO Borrow Rate: 0.5% change is a more fitting description, removing confusion on directionality.

Regarding

The intent of the GHO steward is to have both the option to increase the bucket capacity and the Borrow cap of GHO.

This would result in two segregated actors with Borrow cap possible action on GHO: the CapPlusSteward and the GHO steward.

This is expected and desirable for the DAO as both stewards have different signers (Chaos labs alone vs Chaos Labs + Aave Finance + ACI), so different scopes and limitations; the largest changes require the consensus from more Aave DAO SPs

This section clarified:

GHO Aave Bucket Capacity: 100% increase
GHO Borrow Cap: 100% increase