Governance Updates: Week of December 11, 2023
Last week marked another eventful week in the Aave Governance community. Approximately 21 proposals were pushed on-chain, in various stages of voting and execution. Some of these proposals are still being voted on. The forum also saw activity from service providers and posts from new chains as well.
On-chain Proposals
1. Aave Governance V3 Activation Short
Info: @bgdlabs Active
This proposal details the migration of Aave’s governance system from version 2.5 to version 3. It involves updating smart contracts and transferring permissions to the new system, requiring two coordinated governance proposals across Level 1 and Level 2 Executors. The transition also includes funding the Aave Robot and ensuring compatibility of voting assets (AAVE, stkAAVE, aAAVE) with the updated system. This significant upgrade aims to enhance and streamline decentralized governance within the Aave ecosystem, marking a critical step in its evolution.
2. Treasury Management - Polygon v2 to v3 Migration
Info : @TokenLogic , Active
This AIP proposes migrating most DAO assets from Aave v2 to v3 on Polygon, excluding BAL and CRV. It involves withdrawing assets from v2 and depositing into v3, including amUSDC, amDAI, amUSDT, and others, to enhance yield efficiency. The process includes Polygon treasury holdings, aiming to optimize asset management within the Aave ecosystem.
3. Request for Bounty Payout - December 2023
Info: bgdlabs Active
Allocating 23,600 DAI for Aave <> Immunefi bug bounty payouts and Immunefi fees. It seeks to split bug bounty payments based on report severity to ensure regular rewards for securing Aave. The funds will be distributed to specified white-hat and Immunefi addresses, using aDAI v3 Ethereum, after DAO consultations.
4. Transfer all CRV positions from Ethereum Mainnet Collector to GLC Safe
Info: @Llamaxyz TokenLogic Active
This AIP proposes transferring all CRV holdings from Aave’s Mainnet Treasury to the GHO Liquidity Committee (GLC) SAFE for staking as sdCRV. The transfer includes approximately 6.1 million units of CRV, aiming to leverage the high APR of staked sdCRV to support GHO liquidity. The GLC will manage these assets, focusing on the DAO’s benefit, with actions outlined for transferring and staking CRV from Aave V2 and V3. Forum.
5. Update GNO Risk Parameters on Aave V3 Gnosis Pool
Info: @MarcZeller o/b/o Gnosis Chain, Acitve
This AIP aims to update GNO risk parameters on Aave V3 Gnosis Pool, enabling GNO borrowing and fostering Gnosischain decentralization. The proposal focuses on enhancing GNO utility by making it borrowable, potentially leading to future GNO LSTs and a GNO-correlated e-mode. Key changes include enabling borrowing while maintaining the asset as collateral, adjusting the reserve factor to 20%, and setting a borrow cap at 1100 GNO. This initiative is intended to expand utility and passive income opportunities for GNO holders. Forum.
6. Continuous Security Proposal Aave <> Certora
Info: @Shelly Active
This proposal extends Aave security services by Certora, including governance proposal reviews and bug bounty support, for one year at $1.5m. It focuses on continuous formal verification, manual code reviews, and a 24/7 incident response team. Payment is proposed in GHO and Aave tokens, with a budget reduction reflecting market conditions. Forum.
7. Onboard Native USDC to Aave V3 Markets
This proposal aims to onboard native USDC into Aave V3 pools on Base, OP Mainnet, and Polygon PoS, transitioning from USDC.e. It seeks to streamline the onboarding process by combining multiple proposals into a single meta-proposal. The changes include adjusting risk parameters for native and bridged USDC across various markets to promote its use and efficiency on L2 networks. Forum.
8. Polygon V2 Reserve Factor Updates
Info: TokenLogic Active
This AIP, following AIP 284, proposes increasing the Reserve Factor (RF) for assets on Polygon v2 by 5%, up to 99.99%. The aim is to encourage migration from Polygon v2 to v3 by reducing deposit yield on v2. The increase in RF will direct more interest income to Aave DAO’s Treasury without affecting users’ risk of liquidation or borrowing rates. The RF adjustment will vary across different assets like DAI, USDC, and others. Forum.
9. TokenLogic & karpatkey Service Provider Partnership
Info: @karpatkey_TokenLogic Active
This AIP proposes onboarding TokenLogic & karpatkey for financial services to Aave DAO for 180 days with a 400k GHO budget. They’ll manage treasury, liquidity, and the Safety Module, aiming to optimize asset management and support GHO’s stability. The proposal includes technical and strategic measures for treasury and liquidity management, and safety module enhancement. Forum.
10. Increase GHO Borrow Rate 100 bps to ~6.41% on Aave V3
Info: @ACI Queued
This AIP suggests raising the GHO borrow rate from 5.22% APR to 6.22% APR to help restore the GHO peg and align borrowing costs with market rates. Following AIP-381’s guidelines, this increase is part of a strategy to incrementally raise rates up to 9.5% if GHO’s monthly average price remains outside a specified range. The proposal aims to adjust GHO’s interest rate in response to its current market performance. Forum.
11. Increase Polygon wstETH Supply Cap
Info: ACI Queued
This AIP proposes increasing supply caps by 20% for assets nearing full utilization on Aave V3, particularly on Polygon. The aim is to meet rising market demand for deposits, allowing new users to join and existing users to expand their positions. An example is increasing wsETH’s supply cap from 3.45k to 4.37k on Polygon. These changes, recommended by Chaos Labs, intend to enhance platform liquidity and user participation. Forum.
12. Chaos Labs V2 Ethereum and Polygon LT Reductions
Info: @ChaosLabs Queued
This proposal aims to reduce Liquidation Thresholds on Aave V2 for Ethereum and Polygon, as part of the v2 deprecation framework. Advised by Chaos Labs and Gauntlet, it targets frozen assets, potentially impacting $120K in total value. The proposal prioritizes clear community communication about the changes and affected accounts. Forum.
13. Treasury Management - Add to rETH Holding (resubmission)
Info: TokenLogic MarcZeller Executed
This AIP proposes converting the DAO’s Ethereum Treasury’s wETH holdings into rETH to capitalize on rETH’s higher yield (currently 3.07%). The aim is to enhance the DAO’s ETH asset returns and support Ethereum’s network health through node diversity. The treasury will retain a balance of 100 aEthWETH for ongoing expenses. The conversion will involve swapping all wETH into RocketPool’s rETH. Forum.
14. Activate Proof of Reserve
Info: bgdlabs Executed
This proposal introduces a Proof of Reserve Admin role to the Avalanche V2 Pool Configurator, aiming to activate a proof of reserve mechanism for bridged assets like DAI.e, USDC.e, and others. This mechanism addresses potential attack vectors on bridged assets by verifying token backing on the origination network. It’s a move to enhance security for Aave v2 on Avalanche following its successful implementation in Aave v3. Forum.
15. Sync emergency admin on v2 AMM
Info: bgdlabs Executed
This proposal recommends aligning the emergency admin address of the deprecated Aave v2 AMM pool with those of Aave v2 and v3 on Ethereum. This change, prompted by an internal security review, aims for consistency across Aave instances and simplifies operations. The execution will involve updating the emergency admin to the Aave Ethereum Guardian’s address in the v2 AMM pool. Forum.
16. Gauntlet recommendation to reactivate CRV borrowing on v3
Info: @Gauntlet Executed
This proposal recommends re-enabling CRV borrowing on Ethereum and Polygon v3, as most high-risk CRV positions have left Aave v2 since the Vyper exploit. It suggests adjusting parameters like supply and borrow caps, and debt ceiling for CRV on both networks. The goal is to safely reactivate CRV borrowing while maintaining system stability. Forum.
Snapshot
[ARFC]. BGD. Security budget request - December 2023
Info: bgdlabs Passed Snapshot
This proposal requests a $151,200 budget for two security reviews on Aave, including a $30,000 refund to BGD for an extra audit on Aave Governance v3 voting tokens. It involves compensation for reviews by Mixbytes and Emanuele Ricci, and an engagement with Spearbit for an in-depth review of Aave v3. The funds will cover expenses for past and upcoming security assessments, enhancing Aave’s protocol security. Snapshot.
New Chains
[TEMP CHECK] Launch Aave V3 on Kava EVM
This proposal discusses integrating Aave V3 with KAVA’s EVM, aligning with Aave’s multichain vision. The integration aims to connect Aave with the deep liquidity of the Cosmos ecosystem via KAVA, offering benefits like additional markets, enhanced liquidity, and access to native Cosmos assets. The Kava Foundation also commits to liquidity mining rewards and seeding liquidity in initial markets, fostering Aave’s potential dominance in the Kava ecosystem. Forum
BGD. Aave <> Scroll. Infrastructure/technical evaluation
This technical evaluation by BGD Labs assesses the potential of deploying Aave on the Scroll infrastructure, a Layer 2 ZK rollup on Ethereum. The report analyzes various technical components crucial for Aave’s optimal operation, like oracle infrastructure, blockchain explorer, and compatibility with Ethereum standards. The evaluation finds Scroll to be an acceptable network candidate for Aave v3, suggesting conservative liquidity caps during initial deployment. The decision for Aave’s expansion onto Scroll remains subject to Aave governance approval. Forum
In the Forums
- Aave Governance V3 Activation - Next steps: This proposal details the transition process from Aave Governance v2.5 to v3, focusing on upgrading the governance framework and transferring all operational permissions to the new system. It emphasizes the execution of necessary smart contract upgrades and various preparations, ensuring a seamless shift to a more decentralized and efficient governance structure in the Aave ecosystem.
- Temporarily Pausing GHO Integration in Aave: This proposal suggests a temporary halt in the integration of the GHO stablecoin into the Aave protocol. The pause is recommended to thoroughly assess and adjust the integration process, ensuring that GHO’s inclusion aligns with Aave’s long-term strategic goals and maintains the protocol’s stability and security.
- Harmony & Aave: Horizon Bridge Hack Solution (Recovery One): The proposal discusses a strategic approach to address the repercussions of the Harmony Horizon Bridge hack. It outlines a recovery plan to safeguard affected assets and implement measures to prevent similar vulnerabilities in the future, aiming to reinforce the security and trust in the Aave protocol.
- [ARFC] Chaos Labs - Stablecoin IR Curves Updates: This proposal presents Chaos Labs’ recommendations for revising Interest Rate (IR) curves for stablecoins within the Aave protocol. The proposed updates aim to optimize the financial models of Aave, ensuring a more effective and balanced interest rate environment for stablecoin operations, thereby enhancing the protocol’s overall financial stability.
Events
[TEMP CHECK] Aave Events & Sponsorship Budget
Aave Companies proposes a $550,000 budget in GHO for 2023 to foster community growth through hackathons, side events, merchandise, and the development of the GHO Pass. Key events include DevConnect, rAAVE, and ETHGlobal Istanbul, aiming to boost Aave’s presence, promote GHO adoption, and support community engagement. This budget prioritizes impactful presence at major events and high-quality experiences, aligning with Aave’s strategy to enhance its ecosystem and brand recognition.
rAAVE Istanbul event discussion
That covers our report for the week, we will be back next Monday with more updates about the Aave Governance Forum.