[ARFC] Onboard AUSD to Aave V3 on Avalanche

Governance New Asset
1

[ARFC] Onboard AUSD to Aave V3 on Avalanche

Authors: Agora

Date: 2024-11-05

Summary

This proposal seeks to onboard AUSD, a secure digital dollar backed 1:1 by USD fiat, to Aave V3 on Avalanche. AUSD, issued by Agora, serves as a stable and liquid alternative to USDT and USDC. With a growing AUM and robust liquidity, AUSD will enhance Aave’s liquidity pool, offering users a reliable and efficient stablecoin option with strong institutional backing.

Motivation

Agora offers AUSD, a digital dollar minted 1:1 with USD fiat. AUSD is designed to be a secure digital currency, utilizing one of the world’s largest custodian banks to safeguard assets. AUSD enables users to participate in trading, lending and payments. It is the most cost-efficient stablecoin to transact with due to its gas-optimized smart contract, making it ideal for traders and payments.

Agora operates an open partnership model, allowing collaboration with a diverse range of customers who meet KYB (Know Your Business) requirements and operate in jurisdictions we can serve. This approach contrasts with single partnership models (eg. Exchange-Backed Stables), ensuring that AUSD can be widely adopted across different ecosystems, providing liquidity and stability without conflicts of interest.

AUSD is currently available on Ethereum, Avalanche, Sui and Mantle, garnering $70+ million in TVL and $12+ million in daily DEX volume since contract deployment. The reserve assets are managed by VanEck ($100B+ asset manager) and custodied with one of the largest global banks, ensuring security and safety. AUSD’s unique value proposition also includes zero-fee minting and redemption facilities, making it an attractive asset for all ecosystem participants.

By integrating AUSD into Aave, users will gain access to a stable, liquid asset that supports trading, lending, and other decentralized finance activities. This integration aligns with Aave’s mission to decentralize finance while offering secure and reliable stablecoin options.

POL and Deposit Commitments

We can ensure that $1M+ will be deposited in initial Aave liquidity pools within 1 week of launch. We are working with Tier 1 market makers as well as large institutional firms. Agora already has 50+ institutions (trading firms, exchanges, payment companies, etc.) onboarded.

With Avalanche, in particular, strong additional liquidity programs will be put in place.

Specifications

  • AUSD Token Contract Address:
  • Chain: Avalanche to start
  • Audits: AUSD contracts have been audited by Spearbit and Certora, with zero critical, high, or medium issues identified. We also have conducted a risk audit with Chaos Labs and received an A grade.

Risk Analysis

  • Smart Contract Risk: AUSD contracts follow best practices and have undergone extensive audits by Spearbit and Certora, ensuring a secure and reliable smart contract architecture.
  • Market Risk: AUSD is backed by a portfolio of short-dated USD fiat money market instruments, with the majority of the allocation in overnight repo, which is T+1 for maximum liquidity. This backing minimizes volatility and ensures that AUSD remains a stable and reliable asset within Aave’s ecosystem.
  • Chaos Labs: A risk audit has been conducted by Chaos Labs and we have received an A grade.
  • Oracles: Various oracle providers support AUSD including Chainlink, Chaos, Pyth, API3, Redstone, and others.

Links

Gas Optimization, Bloomberg (Raise Announcement)

AUSD hits $100M in weekly volume on Avalanche 1.

Next Steps

  1. Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage
  2. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal

Copyright

Copyright and related rights waived under CCO.

2

Due to significant gaps in information regarding Agora’s legal structure, corporate governance, and inter-entity relationships, we are unable to provide full support for the ARFC proposal at this stage.

We can do the following legal entity mapping according to the explanations given during the temp check regarding the Agora structure and @ChaosLabs’s Risk Assessment of AUSD.

  • Agora Blue Ltd. functions as the primary interface entity, facilitating platform access and executing core operational services, including minting and redemption (pursuant to Terms of Use);
  • Agora Forge Ltd. is in charge of minting AUSD;
  • Agora Olive Ltd manages the repurchasing of outstanding AUSD;
  • Agora Reserve Trust, a Delaware Statutory Trust, holds reserve assets;
  • Agora Reserve Trust is a limited Agora Reserve Fund LP partner. VanEck actively manages the fund.

The absence of detailed documentation regarding inter-entity relationships, precise operational mandates, and asset flow mechanisms presents material information gaps that require clarification. Specifically, the contractual architecture governing the movement of assets during minting and redemption processes across these entities still needs to be defined in the provided documentation.

Regarding the Agora Reserve Fund LP structure, several aspects require elaboration. Assuming VanEck’s role as General Partner (GP), standard market practice typically entails specific contractual obligations, including fiduciary duties, investment mandate compliance, and operational oversight. The absence of information regarding performance fee structures, investment strategy parameters, and the extent of Limited Partner (LP) control rights exercised by Agora Reserve Trust represents significant disclosure gaps. Understanding these elements is fundamental for comprehensive risk assessment.

To facilitate a thorough analysis, we recommend obtaining additional documentation, including:

  • Detailed corporate structure diagrams
  • Inter-entity service agreements
  • Limited Partnership agreement specifics
  • Asset flow diagrams
  • Fee structure arrangements

We strongly urge Agora to clarify these critical aspects of organizational structure and governance. We welcome further engagement with Agora to complete our due diligence process and look forward to their response addressing these information gaps.