[ARFC] Treasury Management: Update Balancer Ecosystem Holdings

Title: [ARFC] Treasury Management: Update Balancer Ecosystem Holdings

Author: @Dydymoon

Date: 2023-09-26


Following the approval of this TEMP CHECK explaining AIP-42 potential impacts, this proposal will evaluate options to update holdings to maintain maximum emission power by acquiring AURA tokens, enabling to stay exposed to Balancer ecosystem while optimizing the voting power.


AIP-42 leads to a decorrelation of the incentives amounts generated on veBAL & vlAURA, as veBAL emission power is limited to BAL + base Aura rewards, while vlAURA receives additional AURA rewards allocated by the DAO treasury.

Looking at the vote incentives market a few weeks after the update went live, we can observe that the majority of cost paid per vote decreased on both layers. However, it’s common to still see projects overpaying so it might take more time for the full market to understand these changes.

For more context, some veBAL holders voted for the GHO gauges over the past two months without receiving bribes, enabling to generate ~ $300k of incentives on GHO gauges.


This proposal aims to propose several options to update the Balancer ecosystem holdings of the DAO by acquiring AURA to increase its maximum emission power.

Current data (September 26th)

  • AURA price: 0,81$
  • veBAL/vlAURA ratio: 0,1608
  • veBAL value acquired per 1$ of vlAURA bought: 1,84$.

Initial Est. veBAL position

Aave DAO acquisition of 157K B-80BAL_20WETH was executed on this proposal.

If the full amount was locked, the weekly emissions value would be ~ $7,3K per week.

Current DAO holdings

Shortly after this proposal was submitted, TokenLogic submitted two proposals: a first time sensitive one to acquire 443k AURA OTC from Olympus DAO with DAI, executed on this AIP, and another to sell the corresponding value in BPT for GHO, approved on the following TEMP CHECK.

The table below shows the Olympus OTC deal data & impact on Aave treasury once executed using current GHO & BPT prices.

If the DAO was to lock its remaining BPT & AURA holdings now, the weekly emissions value generated would be ~ $10,1K / week.

Improvement scenarios

While an increase can be observed (7,3k to10,1k/week), the maximum emissions can still be improved, either by optimizing or increasing and diversifying the exposure. The tables below show an emission power overview post AIP-42 for both cases.

The current situation would also require to vote on both layers, which complexifies the management, however this option will be possible as Llama’s SAM contract upgrade ARFC to support both veBAL & vlAURA, and propose to grant the asset manager role to the committee will be published in the coming days (code currently in review by BGD).

As described in both options above, the goal of this ARFC is to acquire ~ 1,3M AURA units, either with BPT or with stables.

1) Convert to remaining BPT to AURA

This option considers optimizing the current holding by selling the remaining BPT for AURA, which will improve the gauge power owned without spending more funds to increase the exposure value.

Despite proposing to convert BPT, Balancer remains a strategic partner and this acquisition will actually enable the DAO to grow more liquidity on Balancer, and partially support the SM strategy once live, creating an important amount of bribes for veBAL holders.

If the DAO was to acquire ~ 1,3M AURA, the weekly emissions value would currently be ~ $18,6K / week (almost twice the current situation including votes on both layers).


  • Maximal emission power (Full vlAURA)
  • No extra investment (BPT conversion)
  • Simple management (Vote on one layer only)
  • Less locking restrictions (No decay & 4 months lock)
  • Will enable to grow more liqudity on Balancer


  • Sell BPT acquired to lock veBAL according to the partnership (limited price impact)
  • Can be considered as unfair for veBAL holders who supported GHO at launch
  • Balancer DAO might sell the AAVE acquired during the TokenSwap

2) Keep remaining BPT & acquire AURA to lock both

After receiving some feedback including concerns about selling BPT (initially acquired before AIP-42 at the Balancer partnership to lock for veBAL), this option considers to retain the BPT for veBAL and acquire additional ~ 1,3M AURA to lock for vlAURA with stables from the treasury which increases both the emission power & the exposure value.

If the DAO was to acquire ~ 1,3M AURA with stables and lock the remaining BPT holdings, the weekly emissions value generated would be ~ $23,8K / week.

While this improves weekly emissions by $5,2K, this strategy is less efficient compared to the above as it would complexify the management with the need to vote on both layers (one on-chain, one off-chain), relock the veBAL holdings, manage the two voting periods (weeks/rounds), and cost an extra $1M in stables from the DAO treasury.


  • Increased overall emission power of the Aave DAO (veBAL + vlAURA)
  • Favor good relations with Balancer by following the initial partnership proposal


  • $1M extra investment (AURA acquisition with stables)
  • More complex management (Vote on two different layers)
  • Includes veBAL restrictions (Voting power decay & up to 1 year lock)
  • Emission power not fully optimized

(Despite its maximal estimated efficiency, there isn’t a 3rd option to convert both BPT holdings + $1M for AURA as this amount would be complex to acquire with the current liquidity available)

Acquisition details

Regardless of which option above is voted on the ARFC, the proposal is to acquire AURA with USDC on market to reduce the price impact. If anyone reading this is interested in selling AURA OTC, feel free to comment.

Some Aura contributors & the Aura Ecosystem Fund Committee proposed a 200k AURA OTC deal for GHO (available on September 29th), using a TWAP price from the ARFC forum (posted on September 26th with Snapshot vote starting on September 29th) until snapshot vote ended if approved (October 2nd).

These contributors are open to receive GHO, which can create additional buying pressure if it can be included in the upcoming GHO Funding AIP related to this ARFC, otherwise, it might complicate the implementation compared to using USDC (cc @TokenLogic )

Overview of the AEF deal using the current AURA price to facilitate estimations but may vary depending on the TWAP price:

That leaves ~ 1,1M AURA to acquire on the market. The optimal way to execute these market transactions seems to be using the TWAP orders from Cowswap to split the trades into several orders.

While the price impact of selling the remaining BPT for USDC in one transaction is limited (3,5%), this can be reduced to 2,2% with a split of 5 orders. For AURA, the price impact if acquired in one transaction is quite important (42%), but this can also be reduced to 5,7% with a split of 10 orders.


OTC acquisition: If the Aura contributors & AEF deal is approved, the 200k OTC can be implemented using a similar contract to the one used for the Olympus deal (only difference being the price defined with a TWAP).

This AIP execution should fall under ACI’s Skyward program scope (cc @MarcZeller for confirmation).

Market acquisition: As ~ 1,1M AURA are likely to be bought on market using TWAP orders which can be used with a Safe, the AURA buy and potential BPT sell can be executed by the GHO liquidity committee using the multisig once live (require a fallback handler on it). This should simplify the acquisition compared to creating new contracts for this purpose. More information on TWAP orders can be found here.

Next Steps:

If Option 1:

  • (AIP) Transfer USDC from the collector to OTC contract for AEF OTC deal
  • (AIP) Transfer all BPT from the collector to the committee multisig
  • Committee start TWAP orders BPT for USDC
  • Committee start TWAP orders USDC for AURA
  • Committee transfer back USDC equivalent for OTC deal on the Collector
  • Committee transfer AURA on the SAM contract to lock once deployed

If Option 2:

  • (AIP) Transfer USDC from the collector to OTC contract for Aura deal
  • (AIP) Transfer USDC from the collector to the committee multisig
  • Committee start TWAP orders USDC for AURA
  • Committee transfer AURA on the SAM contract to lock once deployed


The above work can be useful for TokenLogic & Llama pending proposals where I participated (GHO Liquidity strategy & SM Upgrade), but this ARFC is published on my own initiative.

This proposal is not receiving compensation from any third party. This ARFC has been prepared to facilitate community decisions.


Should the Aave DAO acquire 1,3M AURA tokens ?
  • YAE (Option 1: with BPT holdings)
  • YAE (Option 2: with stables from the treasury)
  • NAY
0 voters

This proposal presents two distinct options, both primarily focused on monetary returns, while overlooking the non-monetary commitments already made by Aave DAO. Our comments on each option are outlined below:

Option 1 - Convert All BPT to AURA

The original terms of the token swap need to be considered within the context of this proposal. In Part 1 of the ARC - Strategic Investment BAL Token, it stipulates that the BAL acquired, along with the aBAL holding of Aave DAO, is to be converted to B-80BAL-20wETH (BPT) and locked for a minimum of 1 year. This condition is also reflected in the proposal on the Balancer governance forum, available here.

To consider Option 1 as a valid choice, it should be approved by the Balancer community to ensure a positive relationship is maintained. The best approach to achieve this is to create a proposal for the Balancer community to vote on.

It’s important to note that the BPT to GHO proposal has not progressed beyond the TEMP CHECK stage and is currently on hold while we deliberate on next steps.

The Balancer core team has provided significant veBAL support to launch GHO and continues to support GHO pools. These votes hold monetary value and reflect a strong and healthy relationship. While we acknowledged that voting support can change over time, it underscores the benefits of a robust and prosperous relationship with Balancer. Option 1 prioritizes economic optimization over past commitments and maintaining a close working relationship with Balancer.

Without public endorsement from the Balancer core team and a favorable vote on the Balancer DAO’s Snapshot, we consider Option 1 to be invalid, as it runs counter to the spirit of the partnership.

Option 2 - Convert BPT to veBAL and Acquire More AURA, Locking for vlAURA

In general, we believe Aave DAO should have the option to retain and lock all the current BPT, lock all AURA holdings, and delay further actions. The token swap with Aura Finance and its contributors is integrated into this proposal and should be presented separately through a new ARFC. While acquiring more AURA is something we support, it should not follow the approach outlined in this proposal.

There are additional considerations beyond implementing the token swap. We note that @bgdlabs has a streaming fee nominated in USDC from Aave v3, valued at 760,000 units. After considering the BGD streaming fee, the Aave DAO would still hold 643,600 units of USDC across v2 and v3 in its reserves on Ethereum.

The estimated value of the swap at spot pricing (93 cents) places the 200,000 units of AURA via OTC at 186,000 USDC, slightly higher than the 162,944 units mentioned in the proposal. Acquiring an additional 1.1M units of AURA would cost over $1,000,000 at current spot market prices. Other assets would need to be used to acquire the entire AURA position, as outlined in the proposal, which adds complexity and warrants further analysis and discussion.

Additionally, the 200,000 AURA from Aura Finance and its contributors are conditional upon acquiring at least another 200,000 units of AURA on the market within 6 months (based on our discussions with the Aura Finance team). The effective OTC value is $186,000 upfront and then another $186,000 (assuming the price doesn’t change) through on-market buys.

It’s worth noting that while this comment was being drafted, the spot price of AURA fluctuated significantly, completing a round trip from sub 90 cents to over $1.40 and back again. This highlights the risk of committing to buy on the market, as AURA’s price volatility is difficult to hedge, which @WintermuteGovernance may be able to also confirm.

We recognize that this is a complex topic, and bundling multiple components together may seem like an attempt to simplify things. However, we prefer to first align on the best way to manage the BPT holdings. If acquiring more AURA is the logical next step, we can take the time to carefully consider the next steps.

We extend our appreciation to @Dydymoon for his dedication and effort in presenting his personal perspective. This comment was drafted by @MatthewGraham and represents @TokenLogic’s viewpoint on the matter.


Hello @MatthewGraham, thanks for your feedback.

While the non monetary topics such as the partnership are mentioned, it’s obvious that a treasury management proposal should focus on optimizing the monetary aspects and avoid any bias, so this proposal is as neutral and transparent as possible.

This Balancer partnership proposal was approved several months before AIP-42 proposal was voted & implemented on Aura governance, which considerably impacted the Balancer ecosystem.

Tbh I don’t think it’s required because:

  • It will only delay actions enabling the Aave DAO to start voting on its gauges
  • It would be minimizing AIP-42 impacts which you might misunderstand
  • The partnership proposal didn’t consider potential changes in the ecosystem (such as AIP-42)

Two proposals have been posted to discuss this topic, and the community feedback is pretty clear:

Considering there was no clear objection on both votes, not sure to understand why this proposal hasn’t been moved to the ARFC stage.

It’s mentioned in the beginning of the post that 300k$ of incentives were generated thanks to these votes.

To my knowledge, no Balancer contributors were drastically opposed to the proposals linked above (maybe they understand that considering Aave sizes and plans, this solution will grow more liquidity on Balancer & get more voting flexibility, so overall benefits still Balancer, maybe even more with upcoming proposals like the SM upgrade). Also, I shared this post with some veBAL holders to get feedback before posting.

Finally, veBAL contributors probably won’t request retroactive bribes if holdings are switched to vlAURA, but even if they did, the Option 1 would still be more profitable over time (even if that would be equivalent to buying AURA ~ 1,07$ vs 0,83$ now)

It is worth mentioning that this partnership proposal author is the same as the author of TokenLogic comment above, which might explain why the most rational option isn’t supported but this remains unexpected.

Not sure to understand the rationale here besides:

  • Reduce efficiency by losing money compared to full vlAURA
  • Time lost by delaying actions, especially time sensitive ones like the OTC deal
  • Adding more bureaucracy to the DAO with unnecessary proposals

We should avoid confusions about TokenSwap which can be understood as AURA for AAVE, when what’s proposed is an OTC deal of AURA for stablecoins.

From where did you see 0,93$ ?

The coingecko price is currently 0,83 (it moved since the post was published) so now that would be ~ 166k, however as explained in the proposal, the deal price would be defined by a TWAP so it was just an estimation.

Indeed if the option 2 is voted, USDC reserves might not be enough, but the total stablecoin treasury all chains included is above $21,7M so it shouldn’t be too complex to find ~1M (There is 1,7M+ in USDT between v2 & v3 as well for example)

Yes and as the goal is to acquire 1,3M AURA asap including 1.1M buy on market, this condition will be more than filled.

Weird, did you check the price on a centralized exchange ?

I can see a spike on Coingecko up to 0,885, and it’s now around 0,83, but 1,4$ seems a lot so sounds like the price on a CEX with low liquidity.

It has already been carefully considered and researched as you can see on the post above, but you already know I’ve been following this since AIP-42 was voted, as I did the estimations in the recent TokenLogic proposals.

Anyway, happy to receive any arguments you may have about supporting veBAL over vlAURA, and curious to know what you think should be prioritized above economic and practical aspects, outside of a 6 months old proposal.

The proposal is based on data, neutral and transparent so i don’t understand why you’re saying it’s a personal perspective.

However, in addition to this feedback, I appreciate the transparency about the author of this comment, which helps to avoid any confusion as it’s posted from TL account which has several contributors.


Thanks @Dydymoon and @TokenLogic for your great work in this proposal and helping manage the long-lasting relationship between Aave and Balancer.

All the arguments of both of you are pretty sound and I agree that overall the exposure to the Balancer ecosystem will continue with the AURA purchase.

I have to say though that from Balancer’s side (I’m speaking for myself but think other key stakeholders agree) it would be much better if the BPT didn’t have to be sold but instead used by Aave additionally to the AURA purchased, increasing Aave’s participation further in our governance.

Balancer may have gone through some tough times with incidents but I’m convinced it will continue to be a major force among AMMs through innovation and products with actual PMF. Bear markets are a great time to double down on strategic partnerships like the one Aave has had with Balancer for many years now.


It would likely benefit Aave to have exposure to the BPT on top of any additional AURA purchased.

I couldn’t see if a decision was ever made on veBAL vs auraBAL - if AURA was purchased via treasury funds and BPT was used for auraBAL (instead of veBAL), would this have a considerable effect on the weekly emissions calculation in the op?

1 Like

First of all, something to mention that may have incurred with community members. The parallel proposals being placed by @Dydymoon and @TokenLogic are probably confusing members that are not extremely involved into Aave Governance and assume that @Dydymoon is a contributor with @TokenLogic.

In general, when we’re talking about treasury management - numbers and economical sense is what matters the most. So we’re aligned here with @Dydymoon that while considering the strategic relation with Balancer, the move to AURA makes economical sense.

Something worth stressing to the community is that AURA has very low amounts of liquidity for acquiring the sizes mentioned here. Thus, if any strategy change needs to happen in the future it is likely to be a costly “exit/change” unless if there is an OTC buyer of that size.

@Dydymoon you mention a split of 10 orders for the TWAP. As this intent is quite public and traders can frontrun it based on the expectation that the DAO will acquire over 1M AURA - what price protection have you considered? For optimal execution, we would probably split it enough so that the size is less than 10-15% of the daily trading volume.

With all that said, we’re cautiously supportive of Option 1. Having such sizeable exposure to a 30M mkt cap/84M FDV token is risky but we do realise the emission benefits it brings.



At the ACI we value our long-lasting relationship with @fcmartinelli & the Balancer ecosystem, we worked together for years, and while we acknowledge the effect of AIP-42 of AURA.

One part of the Aave Ethos is “Leave no ghost behind” (legendary swag we distributed for Devcon) and Balancer is part of the Aave family.

sometimes it’s not about the most mathematically efficient path in the short term, but about the synergies and relationships we create over the years.

We will cast a NAY vote on every option of this ARFC, we are supportive of a progressive exposure to AURA, but reject any “dump” of our BPT holdings.


Gm ser ! Thanks a lot for your feedback & understanding despite this being a complex topic for Balancer. Considering Aave size, optimizing the voting power & flexibility would definitely help increase the positive impacts on the ecosystem imo.

Tbh besides not being the most efficient/flexible option for the DAO, I personally don’t have issues with option 2 which will be possible to implement once the SAM contract is deployed, if the Aave community votes for this one.

My goal here was mostly to point out every aspect of both options, especially profitability & management differences for the committee, so the community can take informed decisions.

Agree and the point of this proposal is not to break the partnership with Balancer at all, but instead to grow Aave’s share in the Balancer ecosystem (1,75M AURA is 8,6% of the voting supply, allowing to control 3,55% of the veBAL voting supply)

But most importantly, you know I support Balancer growth as I’ve been trying to working on the SM Upgrade proposal over the past months, which aims to integrate Balancer V2 LPs deposited on Aura with a specific gauge design in the Safety Module, and this strategy is expected to bribe a considerable amount of both veBAL & vlAURA share, in addition to the voting power owned.

That’s also why I proposed this, because overall I’m confident that this kind of integration can benefit Balancer a lot more than just Aave DAO locking 157k BPT for veBAL (for which thanks to the BPT deep liquidity, the price impact would be minimal if sold).

Gm, thanks for your feedback ! My focus was always about increasing the strategic voting power of the DAO to reduce emissions over time. I didn’t included auraBAL in the options because it’s not possible to vote with it (users depositing BPT for auraBAL increase their yield but give up their voting power, which is controlled by vlAURA holders)

If the BPT were deposited for auraBAL using the classic staking (as the rewards should then be used for bribes to answer your question above) it would generate 18% APR atm. The 157k BPT position is worth $1,5M.

($1,5M x 18%) / 52 = $5,2K per week, received in two tokens (BAL + auraBAL)

  • If these $5,2k were used to bribe vlAURA at current average price, it would generate $8,4K/week, which is actually slightly higher than locking for veBAL, but lower than locking for vlAURA.

  • If these $5,2K were used to bribe veBAL at 1,01x efficiency, it would generate 5,25K/week (note that this means bribing at 0,048$/veBAL/week, which is lower than what most projects currently pay)

I didn’t take into account the compounder yield as it would complicate even more the rewards recycling for bribes & because the APR shown is for the past 7 days so might update often.

Finally as most rewards are distributed in auraBAL, using it as bribes, or selling it to bribe with GHO for exemple would both have a bad effect on the auraBAL peg.

EDIT: Small confusion on the sentence above, rewards on the classic staking are distributed in BAL + AURA, unlike the compounder staking receiving most in auraBAL, so the option of using classic staking rewards as bribes wouldn’t impact auraBAL peg.

Gm ! I’d like to specify that while I have contributed to some proposals at Llama over the past 2+ years & some proposals at TokenLogic over the past 5 months, this shouldn’t block me from posting proposals with my own account as I’ve been a DAO contributor and community member for 3+ years with Aave’s best interest in mind.

I kinda always did this type of proposal, even before service providers became “a thing” (without asking compensation as it’s not my focus), and even if that involves political topics such as this one.

Anyway, I was also surprised to see another TL contributor commenting against this post as I communicated about posting it with my account, and because numbers don’t lie so it’s a weird move to go against that.

As you say, it’s complex to define price protection for an acquisition that needs to be approved by governance before, however as explained in the following article, the TWAP orders by Cowswap have interesting features:

  • Price protection: TWAP order won’t execute if the market price dips more than the defined percentage (calculated from the asset price at the time of order submission).
  • Ability to split the swap to several parts and estimate amount per each swap part
  • Estimation of execution time total & by order

According to Coingecko, the 24h trading volume is $270K, so usings 15% of this would mean $40K per swap so a total order split of 25. This can be done I guess, and it would reduce the slippage from 5-6% to 3% atm, but the acquisition would require more time.

With this order size, maybe we can use 5% of price protection, but for higher order we might need to increase it.

Thanks a lot for your feedback !

Gm, thanks for your feedback.

As mentioned in this comment above, swapping BPT would have a small negative impact, while integrations like the SM Upgrade will bring important benefits to Balancer.

I understand the support for Balancer, but you recently proposed to acquire $2M worth of CRV to support the liquidity and recently published a proposal to reduce AAVE emissions spending, so it’s a very strange decision to refuse a $1M worth of AURA acquisition when most of the AAVE and a good part of GHO liquidity are on Balancer. Can you explain the rationale behind this please ?

Also, you’re the first to support “NAY” in the comments instead of another solution that enables the DAO to increase its strategic voting power.

As voting no means to not take actions on strategic assets to support GHO atm and pass on an OTC deal, can you elaborate on an alternative if none of the options is good enough for the ACI please ?



I always appreciate people that value business relationships: they are valueless, for sure.
Would like to add: having, or not having, a certain asset in the treasury doesn’t neccessarily kill or weaken a biz relationship.

The internal financial situation of the treasury and the optimal solution that was studied, sell veBal to finance the Aura purchase, doesn’t weaken in my view the relationship with Balancer. Partners will be partners, especially in long lasting relationship, and can easily understand how contexts and situations might lead to scenarios that yes, for sure are not ideal from the specific standpoint of specific stakeholders (in this case, Balancer), but don’t really change the fact that the two DAOs have been doing and will be doing a lot of business together.
While I can see your point and understand your concerns, I think the strenght of the partnership of Balancer and AAVE won’t have any real impact from this proposal which, again, has to only be read as a financial proposal and nothing more.


I would support this kind of proposal.
Even though there are some Cons that might be speaking against a move like this its still important to see the full picture and the benefits the Aave DAO is getting with it.
Yes, there has been a proposal to acquire BAL token (see here) but it was also already said within this proposal that time will tell what is going to happen with these. And now we are at this exact point where we have to decide what to do.
The weekly emissions would be great sitting at 18.5k and is at a better risk/ratio compared to to this here

@fcmartinelli what would be the benefit for the Aave DAO not selling these token and how would it for example damage Balancer? I don’t think its about ending some kind of partnership or thinking Balancer isn’t strong enough, but about how to get the best financial outcome for the DAO and GHO.
Also as @Dydymoon explained, the SM upgrade and this swap could benefit Balancer even more with more liquidity being directed to Balancer.


Disclaimer: karpatkey is an active contributor in both Balancer and Aura’s ecosystems, the former as official Treasury Managers of the BalancerDAO, and the latter through GnosisDAO’s holdings (Mainnet; Gnosis Chain) in AURA ($1,882,810), auraBAL ($19,115.38), veBAL ($869,233) and stkauraBAL ($3,444,056).

Thanks @Dydymoon for addressing what in our opinion is an extremely relevant topic for the long-term strategic positioning of the Aave DAO.

We might have a better alternative, but first, here are our thoughts on the two proposed options:

Option 1: Convert to remaining BPT to AURA

Aave is part of the Balancer ecosystem through its BAL, aBAL, aEthBAL, and veBAL holdings, and this proposal would decrease the monetary value of BAL emissions, which would ultimately hurt the Aura ecosystem and negatively affect the intended outcome of this initiative.

Moreover, Balancer is historically deeply rooted in the mechanics of the Aave protocol both through the Safety Module and aToken Balancer Boosted Pools. We believe such a relationship should be kept symbiotic and not value extractive.

Option 2: Keep remaining BPT & acquire AURA to lock both

We’re generally supportive of expanding Aave DAO’s AURA holdings to increase its emission power on Balancer. However, we think the DAO should avoid deplicting its reserves of stablecoins to secure a sustainable runway and ensure treasury diversification.

karpatkey’s Option 3: Increase AURA ownership while protecting Balancer and securing treasury stablecoin holdings

In our opinion, there’s a better way to optimise this proposal’s underlying objective—to increase Aave DAO’s emission power on Balancer—while guaranteeing a positive outcome for every stakeholder.

We propose to:

  • Mint auraBAL using B-80BAL-20WETH;
  • Buy OTM $GHO 300K worth of AURA; and
  • Swap $200k worth of AURA for AAVE in an OTC deal with AURA DAO (we’ve gauged AURA DAO relevant stakeholders’ availability and commit our 10% voting power in favour of this).

This way, we ensure that:

  • No BAL gets dumped on the market and veBAL power of Aura Finance is increased;
  • Aave has a steady source of AURA and auraBAL, which can increase future voting power;
  • Total emission power increases from $10.1k/week to $11.1k/week (calculation and assumptions below);
  • Aave treasury isn’t impacted dramatically, as only $300k GHO are spent for increasing its current voting power, and $200k worth of AAVE, which is not significant considering the current treasury holdings;
  • Additionally, this deal onboards Aura DAO into Aave.

Calculations and assumptions

  • We assume that we can effectively swap $300k GHO for 350k AURA. Due to low market liquidity, this trade would have to be split into multiple TWAP orders;
  • OTC deal would swap 3,134 AAVE for 245,800 AURA;
  • We use the same emissions power as in the original post: $0.046/week per veBAL and $0.0063/week per vlAURA;
  • Voting power would likely be higher, as vlAURA voting power would increase after Aura Finance increasing its protocol-owned veBAL.

Gm ! The Aave DAO is not currently holding any BAL or veBAL, holdings are 105 aBAL and 157k B-80BAL-20WETH on mainnet.

Can you elaborate on the rationale behind this please ?

If you’re speaking about slippage when selling BPT, I would argue that below 3% of price impact remains very limited.

Not sure to follow you here, this proposal aims to acquire 1,3M AURA tokens and lock it to support AAVE & GHO gauges. This would also enable optimisation of POL strategies which would probably be deposited on Aura as well. Overall, I’m convinced the outcome of this proposal is positive for AURA.

While I agree that securing an important runaway is important, the total stablecoins in the treasury across all chains is above $21,5M, enabling the DAO to acquire $1M of AURA as strategic assets without taking big risks (which is treasury diversification imo).

Option 3:
About market buy, it would be better to not use GHO for a $300K acquisition to avoid adding selling pressure, quite incompatible with the DAO goal to repeg.

About token swap: I asked some vlAURA holders interest for it, but the feedback received was to avoid AURA from the treasury and focus on stables as counterparty if deals were to be made, but cool to know if the DAO is open for that too.

Assuming the swap you mention is different from the OTC deal proposed by the AEF and contributors (can you confirm ?) If yes, this would increase the available OTC deal to 400K AURA, without increasing stablecoins spent, so happy to write a proposal for the Aura forum in that case.

This would also reduce the amount to be acquired on market from 1.1M to 900k, reducing the total price impact and amount of orders required.

According to your option, the DAO would end up with around 600K AURA (acquired from the 300k buy + 200k token swap), leading to 1.04M total with the 440k bought from Olympus, so this remains quite lower than the 1,75M total goal.

As explained above, auraBAL has no voting power and this strategy would complexify the rewards management for the committee by creating bribes with rewards earned in two tokens.

The Aave treasury doesn’t hold much GHO outside of the amounts acquired with other stables for specific purposes (DAO expenses), as the only source would be the fees which are still limited for this order size.

As for the DAO treasury, spending $1M would represent 4,5% of the total stablecoin treasury (less than the recent $2M CRV acquisition), so not sure if the AURA acquisition would have a “dramatic impact”.

Indeed, the veBAL supply would increase by 2%.

As Aura Finance controls 39%, around 0,78% of the increased veBAL supply would be controlled by vlAURA holders, increasing the veBAL/vlAURA ratio from 0,1593 atm to 0,1670.

The total emission power with option 1 is not $10,1k (which is emissions with the current holding locked, but $18,6k with initial numbers ($19,8k now as AURA price increased btw).

There might be a mistake here, as the emission power in the initial post are 0,048$/veBAL/week (close to yours), and 0,011$/vlAURA/week (twice yours).

Breakdown of max emissions generated with option 3:

  • If the DAO was to acquire ~ 600k AURA, growing holdings to 1.04M vlAURA, the weekly emissions value would currently be ~ $7K / week

EDIT: Error, 7k was calculated on 600K, weekly emissons for 1,04M AURA are $12,1K/week

  • As calculated above, the rewards earned with auraBAL classic staking which could then be used to bribe can enable to generate up to $8,4K/week.

The total value of weekly emissions generated with Option 3 is 7+8,4 = $15,4k/week.

EDIT: Total value of weekly emissions generated with Option 3 is 12,1k + 8,4k: 20,5k$/week

Option 3 remains lower than Option 1 (19,8k atm) and 2 (25,4K), but it’s higher than the current state. It’s also more complex to implement than option 1, so I’m not convinced that it’s a better alternative, but was worth considering indeed.

EDIT: After fixing my error above, Option 3 is actually higher than option 1 (20,5k vs 19,8K) but still more complex to implement and cost 500K$ more than Option 1, and still generates less than option 2 (but also costs $500k less).
Option 3 will be added as an option in the ARFC if you can confirm the tokenswap is a different deal from the OTC one, and the market buy option will be proposed with USDC.

Sorry for the mistake and thanks a lot for your detailed and valuable feedback !


@Dydymoon Hey! Thanks for your feedback. Please find the answers below.

Price impact of selling Aave’s BAL holdings OTM at the moment of writing is indeed 3.28%. But having a strategic partner of Balancer selling all its BAL position sends a signal to the market that could keep on hurting BAL price.

Correct, we meant it would hurt Aave ecosystem, it was a “misclick”. ;)

You’re right. Technically speaking—you’d still be diversifying the treasury—although not into a sufficiently liquid asset (Coingecko’s 24 Hour Trading Volume: $268,782), which defeats the risk management purpose.

Both using GHO or other stables in the treasury sounds reasonable for us, we’re just raising a new option for community discussion.

The token swap is indeed different to the one mentioned, and as we specified, it would require Aave to convert its BPT into auraBAL, so it’s not compatible with Option 1.

We’re questioning that goal, as it was defined by assuming that the DAO would be dumping its entire BPT holdings. We’re proposing a scenario that maximises the outcome for every stakeholder.

As mentioned above, GnosisDAO’s treasury has $3.6M of exposure to auraBAL, so we reckon that auraBAL has no voting power. If Aave DAO were to stake, it would receive a 35% APY (8% in AURA and the rest in auraBAL). This could be locked to increase voting power (in the case of AURA) and used to bribe to increase emissions, sold for AURA, or consider other strategies.

The proposal to create a Liquidity Committee—which in our opinion should extend its mandate beyond GHO e.g. AAVE—is an acknowledgement that this subject’s strategic nature and scale are worth dedicated resources that should manage the added complexity.

This is Vs baseline scenario, not Vs Option 1.

We’re happy to contribute! This is indeed a separate OTC deal to the one presented above—we’ll work on the proposal and post it on the forum to seek community alignment.


Thanks for your fast answer !

I believe your option is helping to reach a great compromise indeed, but besides switching market buy to USDC, I’d like to propose 2 improvements for it, and highlight potential technical issues for auraBAL staking strategy.

I’ll also post a clearer recap below with actual numbers for each to avoid confusion with previous data as prices & metrics have slightly changed over the past days.

How locking increasing the strategic asset voting/emission power & potentially growing boosted POL on Aura would hurt Aave ? Not sure to follow ^^

It’s worth mentioning that the auraBAL liquidity ($9,7M) is not much higher than the AURA one ($5,7M) on Balancer, and the 24h trading volume is actually lower ($104K for auraBAL vs $269K for AURA).

Using GHO for market buy was my main concern, so it’s great if we’re aligned on using USDC instead.

The OTC deal with AEF & Contributors is available on Options 1 & 2, and can probably be compatible to Option 3 if updated as follow:

  • Increase the market buy from $300K to $400K in order to match the $200K OTC Deal + the 200k Tokenswap
  • If technically possible, AURA rewards earned from staking sent to the SAM contract to be locked for vlAURA, and replaced by USDC (or AAVE) of the treasury to be used as bribes with the BAL rewards instead.

I assume that with the above updates which benefit Aura, the OTC deal should be possible to include in a revised Option 3 (and if technical topics can be handled on Aave side).

If Aura DAO refuses to do the OTC deal & token swap, the amounts can be moved back to the ones proposed in the initial Option 3.

I’m not sure using the auraBAL compounder is a good idea for the following reasons:

  • Since it’s a compounder strategy, auraBAL rewards can’t be claimed, so it would require to calculate the estimated yield (based on a 7d APY) and withdraw the corresponding amount on a weekly basis.

  • Assuming auraBAL yield is calculated, withdrawn and used for bribes, this would definitely create an important selling pressure which will impact the auraBAL peg, which is not synergistic at all with the Aura DAO.

While I agree that we should avoid spending the AURA in bribes and rather lock it for vlAura, the vote incentive budget should be maintained (in AAVE or stables) in order to keep enabling the increase in weekly emissions & keep Option 3 competitive. Also the classic staking earns more AURA than the compounder.

For these reasons, I believe using the auraBAL classic staking which rewards in BAL + AURA for 18% vAPR would be more synergistic with Aura for Aave usage than depositing on the compounder.

Technical concerns of staking for auraBAL:

Assuming Option 3 is approved, did you consider the staking implementation & reward management for it ?

The StrategicAssetManager (SAM) contract which is designed to lock assets used to vote, should support veBAL & vlAURA. As auraBAL wasn’t considered before and is not really a strategic asset, it makes me wonder where it could be staked first.

There are several options imo, but this adds more complexity to define:

  • Staked on the committee multisig:

Easier solution to implement this strategy as the committee could stake the auraBAL, claim the rewards weekly, use BAL for bribes, send AURA to the SAM contract & call the lock.

The complexity would be to replace the equivalent $ value of AURA earned by either USDC or AAVE to not impact the bribe budget calculated. Also, this requires trusting the committee with the auraBAL position management.

  • Staked on the collector contract:

I’m not a dev so correct me if I’m wrong here, but this would probably require upgrading the collector contract to add functions enabling the auraBAL position management.

The SAM contract allows the DAO to avoid updating the collector for voting assets, but as explained above auraBAL will not be part of the assets supported when deployed (can be updated later though).

Assuming auraBAL are staked there, the committee should be able to claim & send AURA to the SAM, claim & send BAL with equivalent AURA value in USDC to the multisig for bribes creation.

  • Staked on the SAM contract:

Despite auraBAL not being a strategic asset, this contract can be updated to support others.

This solution is possible but would delay the strategy as the new SAM update would need to be coded, and submitted for review to BGD.

In this case, AURA would already be in the right place, but BAL would need to be sent to the committee for bribes, with USDC from the collector to replace the AURA.

Lmk if you have other ideas. Tagging @bgdlabs who can help bring clarity to decide on these technical points.

Definitely agree here, and it’s the goal since it was first proposed. The committee was initially proposed in the SM part 5 TEMP CHECK, and re submitted later under TL to implement it faster, as it’s important for GHO strategies.

Moreover, you are right that there might be way more to do for this committee than what’s in this ARFC, I’m actually working on a proposal to clarify it and update the scope.

Awesome, happy to help, lmk if you wanna co-author the tokenswap proposal on Aura :fire:

Recap of options with updated numbers, and inclusions of the above suggestions:

Option 1: Convert BPT to AURA

Pro & Cons available in the initial post.

Option 2: Lock BPT for veBAL & buy AURA with stables:

Pro & Cons available in the initial post.

Karpatkey Option 3 initial: Mint auraBAL & use rewards for bribes + Acquire $500K of AURA ($300K on market with USDC, $200K token swap for AAVE with the Aura DAO)


  • Mint & stake auraBAL instead of selling BPTs
  • Good emission power (vlAURA votes & bribes)
  • Simple management (Vote & bribe on one layer only)
  • Less locking restrictions (No veBAL decay & 4 months lock)
  • Reduce AURA amount to acquire on market
  • Increase veBAL/vlAURA ratio


  • Complexify the strategy implementation (where to stake auraBAL)
  • Complexify the rewards management (send AURA to lock, BAL to bribes + equiv)
  • Requires a $500K extra investment (including $200K in AAVE)
  • Suggestion to use auraBAL as bribes from compounder (dangerous for the peg)
  • Low liquidity & trading volume on auraBAL

Revised Option 3 proposed: Mint auraBAL in classic staking & use BAL + USDC/AAVE rewards for bribes & lock AURA rewards + Acquire $800K of AURA ($400K on market with USDC, $200K token swap for AAVE with the Aura DAO, and $200K deal OTC with AEF for USDC).


  • Mint & stake auraBAL instead of selling BPTs
  • Very good emission power (vlAURA votes & bribes)
  • Simple management (Vote & bribe on one layer only)
  • Less locking restrictions (No veBAL decay & 4 months lock)
  • Reduce AURA amount to acquire on market ($400K vs $1,1M)
  • Enable an accumulation of AURA long term (rewards replaced for bribes)
  • Increase veBAL/vlAURA ratio
  • 1,4M vlAURA locked & 157k BPT staked ( good for Aura)


  • Complexify the strategy implementation (where to stake auraBAL)
  • Complexify rewards management (AURA to be lock, BAL + equiv USDC for bribes)
  • Requires a $800K extra investment (including $200K in AAVE)
  • Low liquidity & trading volume on auraBAL

In terms of emission value, the initial Option 3 is similar to Option 1 ($20,8K vs $19,8K weekly), while the revised Option 3 proposed is similar to Option 2, which was the highest amount proposed ($24,9K vs $25,4K weekly).

I believe the revised option 3 can be a very good compromise for all stakeholders.

If no other comment arises, I’ll submit the ARFC snapshot vote tonight.


Thanks everyone who participated to this discussion !

This ARFC vote has been published on snapshot.
The vote will start in 24h.

Thanks, @Dydymoon and @Karpatkey .

I support option 2. I also recommend further additional investment considerations

Assuming that the risk premium required to provide liquidity to the USD Stablecoin-Pool is equivalent to the interest rate on US Treasuries (4.5~5.5%), the two GHO Stable-Pools to be boosted would also need to yield more than 10%.Assuming the TVL of the two GHO Stable-Pools is 50m, any of the currently proposed Option1~3 would require additional investment to realize a yield of more than 10%.Therefore, I recommend the selection of Option 2 and consideration of further additional investments.

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Hello, Governance has spoken.

The proposal failed to reach the 320k quorum with 311k YAE votes.

Considering Option 3 designed by @Karpatkey was a few thousand votes from quorum, with the ACI we invite them to re-try the governance process with a lighter proposal tailored around Option 3.

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Hello, this is incorrect, the quorum is calculated with the total votes all options, not just the most voted.

The governance has indeed spoken, and despite the biggest delegate of the DAO not casting their vote (ACI), the quorum has been reached by 117% with 376K / 320K votes.

Option 3 is definitely valid with 83% & can be moved to the AIP stage as you can see on the screen below:

Next Steps

Calculated TWAP price

The tables below calculate the TWAP price for AURA & AAVE tokens for the period from Sept. 26th to Oct. 4th and corresponding tokens amount as mentioned in the proposal:

AIP scope to finalize the acquisition part of this proposal:

  • Prepare OTC deal & Token Swap contracts

  • Transfer 200K USDC from the collector to the OTC Deal contract

  • Transfer 400K USDC from the collector to the committee multisig

  • Transfer 3052,13 AAVE from the ecosystem reserve to the Token Swap contract

  • Receive 241 433,31 AURA for OTC deal

  • Receive 241 433,31 AURA for Token Swap

If the auraBAL is staked on the multisig (which is easier/faster but not the safer implementation), sending the BPT from the collector to the committee multisig can be included in the AIP above. Otherwise, another proposal will be published to define the auraBAL strategy.

In case the ACI keeps ignoring the request to implement this AIP under the Skyward program, I’ll reach out to other service providers, who are also invited to contact me if interested to work on executing this AIP.

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As authors of the ARFC and TEMP CHECK framework, we at the ACI are well-versed in the governance rules.

Quorum is defined by 320k YAE votes. No YAE option reached this threshold, so the quorum was not met.

Your past experiences in the Stake ecosystem and at TokenLogic underscore the importance of adhering to established guidelines. It’s evident that not following these guidelines, combined with a lack of team collaboration, has had repercussions on your professional trajectory.

While you have your perspective, it’s essential to approach these matters with a clear understanding of the rules and a collaborative spirit. The Aave community values constructive dialogue and teamwork.

We wish you the best in your future endeavors.

Closing this topic as governance coordination will continue with the imminent @Karpatkey version of Option 3 of this proposal.