[ARFC] Onboard New Risk Service Provider

Title: [ARFC] Onboard New Risk Service Provider

Author: ACI ( Aave Chan Initiative)

Date: 2024-04-12


Summary

The current ARFC is set to gather all information regarding potential new Risk Service Provider for Aave DAO and allow governance to choose at ARFC Snapshot stage, which proposal shall move forward to AIP for final consideration as New Risk Service Provider alongside Chaos Labs.

Motivation

Currently there are 3 different proposals for just one Risk Service Provider slot.

As agreed by community feedback, to optimize ressource allocation, Aave DAO will only have two Risk Service Providers.

Currently, Chaos Labs is one of the Risk Service Provider, and the other slot will be represented by one of the current 3 teams that submitted different proposals previously in the form of TEMP CHECK.

It has been also decided to allow one ranked voting ARFC snapshot to allow governance to express their preference.

Specification

There are currently 3 proposals from 3 different Service Risk Providers. All proposals have passed both TEMP CHECK and TEMP CHECK Snapshot stage.

In order to make easier to decide at ARFC Snapshot, which proposal shall move to AIP for final consideration (and therefore, which Risk Service Provider should be onboarded into Aave DAO), a table with a summary of each proposal has been made.

Risk Service Provider Profile TEMP CHECK Proposal’s duration Desired Budget
LlamaRisk Established in 2021 as a service to Curve DAO and its LPs, providing risk transparency analyses of assets listed on Curve, including stablecoins, RWAs (Real World Assets), LSTs (Liquid Staking Tokens), and LRTs (Liquid Restaking Tokens). In 2023, partnered with Prisma Finance to develop a comprehensive framework for assessing LST collateral risk, to produce detailed analyses for onboarding assets onto the protocol. We have since expanded our suite of risk management solutions with agent-based simulations and DeFi strategy management. [TEMP CHECK] Onboard LlamaRisk as Aave Risk Service Provider 6 months $250,000
OpenBlock OpenBlock is an established provider of economic modeling for leading protocols in the space, including: EigenLayer, Lido, Arbitrum, Solana, Sui, Uniswap, Scroll, Fuel, Linea, Mode, and many others; we have also received a small grant in the past to study incentives on Aave. OpenBlock Labs is based in San Francisco, CA, dedicated to fostering sustainable growth within decentralized protocols through a data-driven platform. [Temp Check] Onboard OpenBlock as Aave Risk Service Provider 6 months $350,000
Allez Labs Allez Labs is a team of data and risk experts with deep experience with Aave and its community since 2019. We have been involved in nearly all risk events that have affected the protocol. We are a team of longstanding Aave risk contributors, solicits community feedback for a 6-month engagement with Aave DAO. Our goal is to deliver continuous risk management and R&D to the DAO. We aim to maintain and improve Aave’s strong risk standards and support Aave’s growth and development with a risk conscious approach. [Temp Check] Allez Labs risk provider proposal to Aave DAO 6 months 400,000 GHO

As a result, the ARFC Snapshot will have the following voting options:

Option A: Onboard LlamaRisk as Risk Service Provider

Option B: Onboard OpenBlock as Risk Service Provider

Option C: Onboard Allez Labs as Risk Service Provider

Option D: Abstain

Disclaimer

This proposal is made independently by the ACI.

Next Steps

  1. If consensus is reached on this [ARFC], escalate this proposal to the Snapshot stage.
  2. If the ARFC snapshot outcome is YAE, escalate to an AIP vote for final confirmation for desired option as potential New Service Provider.

Copyright

Copyright and related rights waived via CC0.

6 Likes

Thank you ACI for taking lead and bundling all these proposals into one ARFC.
Good luck to every risk service provider and happy to work with one of you in the future.

4 Likes

Thanks to the ACI for pulling all this together in one ARFC. It is encouraging to see a competitive tender process between three providers looking to secure a supplier role with Aave and complement the work done by Chaos Labs.

Whilst I readily admit to being no security expert I do believe the recent ARFC discussions on Dai Risk were a fantastic opportunity for all three providers to demonstrate their take and post their analysis to back up their recommendations.

Two of the three providers choose to do so, Allez Labs and LlamaRisk, so immediately that predisposes me towards them as, if Openblock aren’t willing/able to provide analysis to support their bid then I must question how serious they are.

Based on the above for me it’s between two the two candidates who did take the time to provide analysis and hopefully @SaucyBlock to whom I delegate will take that into consideration when voting on my behalf.

8 Likes

I have said this before and I will say it again: Proposed budget should not be a consideration in the voting. Aave is profitable as is and the difference between #100-200k is miniscule (especially when we are spending millions on Merit with much less oversight on how that is actually spent). Let’s just have the fee set to $400k and evaluate the three on their own merits.

2 Likes

Hello, As the ACI,

I think both @LlamaRisk & AllezLabs sDAI analysis have been brilliant and up to our expectations for the role.

we noted OpenBlock silence on the matter & below expectation answer on weETH proposal.

as noted by @midapple budget will not be considered in our choice, all of them are in an acceptable range for the DAO.

this will not be an easy choice, and we invite the community to ask questions & provide feedback before this proposal gets escalated to a vote.

Regardless of the final outcome, excited to work with one of y’all in the future.

5 Likes

We would like to thank the Aave DAO for considering onboarding Allez Labs as a risk contributor. Our snapshot was successful with the most participation, and we are happy to see so much engagement regarding what we believe to be an important opportunity to strengthen Aave.

We would love to have the opportunity to field any questions, comments, and concerns from any delegates and community members about our proposal. As stated in our TEMP CHECK, we believe openness is a key aspect of DeFi and continue to look forward to answering any questions.

- MC, Allez Labs

3 Likes

The current proposal has been escalated to ARFC Snapshot.

Vote will start today, we encourage everyone to participate.

1 Like

We have voted YES in favour of the LlamaRisk and Allez Labs TEMP CHECKs and NO against the OpenBlock TEMP CHECK. We will stick to this view, especially given the quality of analysis provided by LlamaRisk and Allez Labs and the relative lack of quality provided by OpenBlock, and only consider LlamaRisk and Allez Labs in our analysis.

The table below outlines our framework for assessment:

Criteria Description Winner Explanation
Cost Cost of services LlamaRisk LlamaRisk has proposed a cost of $250K while Allez Labs has proposed a cost of 400K GHO. While cost is not a big factor in our decision, we think it should play a role in a comparison.
Experience Level of risk management experience Equal LlamaRisk has significant relevant experience with Curve and has assessed a variety of assets (RWAs, LSTs, LRTs). They have assessed LST collateral risk in depth, and have experience in legal regulatory advisory and policy work. They have a battle-tested agent-based simulation model. Allez Labs has great experience in its former Aave team which helped develop Aave’s risk frameworks, showing great intimacy with the Aave protocol. They were involved in the ideation of GHO and created the GSM, proving their deep stablecoin experience.
Added Utility to Aave The added value the risk provider can bring to Aave on top of that already provided by Chaos Labs, judged by scope, credentials, and strength of team LlamaRisk LlamaRisk’s legal regulatory and advisory expertise brings a new dimension to Aave’s risk management. Their experience with crvUSD, a stablecoin that is not GHO, may also bring further insight, in our opinion, to how GHO adoption can be increased. Moreover, LlamaRisk’s experience with providing risk reports for RWAs, LSTs, and LRTs will be helpful for Aave going forward, especially as RWAs and LRTs become more prominent. For the former, LlamaRisk’s legal and regulatory expertise may become very relevant. This does not mean that we are discounting Allez Labs’ expertise at all, which is substantial as well. We feel that LlamaRisk has an edge given their expertise can better complement what Chaos Labs already brings to the table.
Openness & Transparency Level of insight into risk models & decision-making Allez Labs Allez Labs will democratise access to its risk insights and open source its data pipelines and models. LlamaRisk will provide disclosures and reports on their spending. We think both providers are relatively equal, but Allez Labs’ emphasis on open sourcing its models puts it slightly ahead.
Alignment with Chaos Labs Relationship and working model with Chaos Labs Equal It is important for both providers to work hand-in-hand with Chaos Labs. We feel both providers are equal here given Chaos’ comments on both forum posts.

Given the above analysis, we think the added utility brought by LlamaRisk sets it apart and we will therefore vote in the following order:

  1. LlamaRisk
  2. Allez Labs
  3. OpenBlock
3 Likes

Following Snapshot monitoring, the current ARFC Snapshot just ended, with Onboarding LlamaRisk as Risk Service Provider as winning option, reaching both Quorum and 589K votes.

Next step will be the publication of an AIP for final confirmation.

2 Likes

Does the community have any issue with LlamaRisk running a Morpho vault? I was under the impression that this was explicitly off limits and grounds for immediate termination for any of our service providers. It seems @LlamaRisk has been virtually unanimously agreed upon by our large stakeholders.

It would be helpful to the Aave community if the major stakeholders can clarify and ideally codify what is and is not off limits for service providers. @ACI @MarcZeller @EzR3aL @Emilio @eboado

And to be clear, nothing against @LlamaRisk. They seem to be a fine, capable option. I have no opinion on any of this. Whoever the risk provider ends up being, I will continue to push, ask questions and comment where I believe clarity and further discussion is warranted as I have been doing consistently.

1 Like