LBS Blockchain Society Delegate Platform

Adjust Aave Governance Level 2 Requirements

Vote Result: YES

Rationale

In line with our rationale for the ‘Use AAVE Ecosystem Reserve to Vote YES on Proposal to Adjust Level 2 Governance Requirements’ proposal (noted above), we voted YES for this proposal as well.

1 Like

Risk Parameter Updates for Aave V2 ETH (2022-10-06)

Vote Result: YES

Rationale

In line with our rationale for the ‘[ARC] Risk Parameter Updates for Aave V2’ proposal (noted above), we voted YES for this proposal as well.

2 Likes

Whitelist Balancer’s Liquidity Mining Claim

Vote Result: YES

Rationale

The initial contract did not consider the need for calling the claimRewards function to claim stkAAVE, with this proposal acting as a fix. Because this is a technical solution to enable Balancer to take control of legitimately accrued rewards, we are voting in favour of this proposal.

Risk Parameter Updates for Aave V2 ETH

Vote Result : YES

Rationale

Given the price manipulation attacks on other protocols (like Mango Market), there is a need to act prudently in the current environment, and the proposal from Gauntlet to change risk parameters for BAL, BAT, DPI, MANA, REN, and ZRX is necessary. It is also important to act quickly, which is why we have decided to vote to adjust the risk parameters on Aave v2 ETH and v2 and v3 Polygon after discussing the risk model in depth with the Gauntlet team. The assets do not currently have high liquidity and were added to Aave when conditions were different in the bull market. The loss for liquidated users due to the parameter changes is minuscule compared to the value protected.

We would also recommend subsequently revisiting the parameter changes for DPI since it can be redeemed for its constituent assets, but are in favour of the two proposals as they are now due to the necessity to act quickly.

1 Like

Risk Parameter Updates for Aave Polygon Markets

Vote Result : YES

Rationale

Given the price manipulation attacks on other protocols (like Mango Market), there is a need to act prudently in the current environment, and the proposal from Gauntlet to change risk parameters for BAL, BAT, DPI, MANA, REN, and ZRX is necessary. It is also important to act quickly, which is why we have decided to vote to adjust the risk parameters on Aave v2 ETH and v2 and v3 Polygon after discussing the risk model in depth with the Gauntlet team. The assets do not currently have high liquidity and were added to Aave when conditions were different in the bull market. The loss for liquidated users due to the parameter changes is minuscule compared to the value protected.

We would also recommend subsequently revisiting the parameter changes for DPI since it can be redeemed for its constituent assets, but are in favour of the two proposals as they are now due to the necessity to act quickly.

1 Like

Announcing our new Envoy Proposal Alerter tool!

The problem

As delegates sitting across multiple protocols it can be difficult to keep track of all the new proposals and executive votes coming onto the platform.

Solution

We have developed an internal tool called Envoy that we use to keep track of new and expiring proposals. It is a simple Node.js application that regularly scrapes the governance page and forwards alerts to a frontend Telegram bot. We have also integrated Hal to deliver Snapshot alerts, although it doesn’t (yet) send alerts for poll deadlines.

We are sharing this tool with the Aave community in case other delegate teams run into the same problem. You can now join the Telegram channel here to start receiving alerts:

Telegram: Join Group Chat

Feedback

Any feedback or suggestions on the tool would, of course, be greatly welcome.

Aave v3 Polygon wMATIC Interest Rate Update

Vote Result : YES

Rationale

Increasing utilisation of the wMATIC tokens will increase protocol’s revenue, and this proposal only intends to modify parameters of a listed token. The strategy itself is fairly straightforward: lowering rates against staking yield to incentivise borrowing from Aave v3 Polygon’s liquidity pool. Therefore, given the need to adapt parameters to deal with market conditions and the potential revenue increase from changing this parameter, we have decided to vote YES for this proposal.

Risk Parameter Updates for Aave V3 Avalanche

Vote Result: YES

Rationale

The proposal by Gauntlet is in line with continuously adjusting parameters based on prevailing market conditions. Since the impact on VaR is modelled to be minuscule, and there is the potential of a material increase in borrow usage, the parameter changes are sensible. Moreover, the phased approach taken by Gauntlet to gather initial data and re-calibrate the parameters is ideal, while changing the parameters of only the most liquid assets in light of the recent price manipulation attacks across DeFi is prudent.

Taking all of the above into account, we have decided to vote YES for this proposal.

1 Like

Add Login With Unstoppable as an Option to the Wallet Connect Dialog of the Aave App

Vote Result: NO

Rationale

The benefits for integrating Unstoppable Domains and Login with Unstoppable are not clear, and the risks are not outlined at all. There is no post on the governance forum that provides any detail. Additionally, it is likely that the target audience for Unstoppable overlaps with that of Aave and they are already exposed to Aave. Therefore, we are voting NO for this proposal. However, we will definitely reconsider our decision if there is more information provided.

Add TRYB to Aave V3 on Avalanche Network, Isolation Mode

Vote Result: NO

Rationale

TRYB is a low market cap, low liquidity stablecoin with an extremely low amount on-chain, as reflected in FranklinDAO’s rationale. Volatility for the stablecoin is high, and as they explain above, revenue for Aave is expected to be low. The market cap is only $12 million, which is too low for a flagship protocol like Aave. Moreso, the Independent Auditors’ reports for Proof of Reserve are infrequent - Proof of Reserves should not happen only twice a year, although there is precedent for this in the crypto space with the characteristics of USDT. Lastly, listing with a 0% LTV but 70% LT does not make sense if TRYB is only being listed as a Borrow asset.

In summary, given the issues above, we have decided to vote NO for this proposal.

1 Like

Deploy Aave V3 to zkSync 2.0 Testnet

Vote Result: YES

Rationale

zkSync is one of the leading contenders to deploy a (Type 4) zkEVM, alongside Scroll and others, on top of Ethereum. zkEVMs inherit the security of Ethereum while enabling mass scalability and composability. It is also relatively easy to deploy existing EVM code to them due to their EVM-compatibility, and data availability will further enable high throughput and low fees by migrating data off-chain.

For a chain which has high potential to draw users from across DeFi and other L2s where Aave is already deployed, it would make strategic sense for Aave to deploy early to testnet and iterate with the Matter Labs team. Aave is a flagship DeFi protocol and deploying to zkSync could help reduce fees, increase throughput, while maintaining the same level of security.

Therefore, we have decided to vote YES for this proposal to deploy Aave V3 to the zkSync 2.0 Testnet. However, we don’t think Aave V3 is ready for mainnet launch at this stage given the early launch and incomplete feature set - for mainnet we would prefer a “watch and wait” approach.

Great and brilliant that can help this community grow

2 Likes

Security and Agility of Aave Smart Contracts via Continuous Formal Verification

Vote Result: YES

Rationale

We will support the continuation of Certora’s engagement with Aave since we acknowledge the value they have added to Aave’s community so far, their effort and results for seeking the community’s engagement, and their willingness to continue doing so in the long term. It is important to acknowledge that it is difficult to assess the relative success or failure of a product like Certora, which is judged more on the bugs that are missed as compared to the bugs that have been identified. However, Certora’s track record to date gives us confidence in their abilities and product, along with the direct engagement they have had with LBS Blockchain Society over the last week. Moreso, compared with the fees charged for the past engagement, the current proposed fees do not seem to be extortionately high.

[ARC] Staked ATokens, A New Aave Primitive Exploring Vote-Escrow Economies

Vote Result: YES

Rationale

We have voted YES since, overall, the proposal shows how this integration can offer enhanced rewards and increased capital efficiency while maintaining reasonably low risk. Among the various ways to experiment with different VE protocol integrations, this seems the safest to begin with.

It remains to be considered what the preferred option for new collateral type listings is: either bringing this to the regular V3 market using the relevant security measures such as isolation mode or launching a new V3 AMM Market. A new V3 AMM Market could be the safest option.

1 Like

[ARC] - ERC4626 Strategies as Productive Collateral

Vote Result: YES

Rationale

Onboarding this type of collateral in Aave will allow for an increased number of use cases and yield strategies that can incentivize borrowing demand.

We will support this proposal since we believe it has the potential to foster the ecosystem’s growth; however, we would like to highlight the risks it bears (as shown in Gauntlet’s analysis) and stress the need for a deeper thought at the time of defining both collateral types and parameters.

We will have to very carefully judge the risk of the LP tokens that are allowed as collateral since there could be a situation of over-leverage and over-hypothecated risk, which could be negative for Aave since they would have to absorb the bad debt. Gauntlet also highlighted that it is possible that liquidators do not have incentives to buy the assets at depressed prices, leading to Aave having to absorb that bad debt, highlighting the need for prudence and conservatism in the assets onboarded as collateral.

Certora Continuous Formal Verification

Vote Result: YES

Rationale

In line with the Snapshot proposal (Security and Agility of Aave Smart Contracts via Continuous Formal Verification) previously submitted by Certora, we have voted YES for this proposal as well.

[ARC] - Strategic Partnership with Balancer Part #2 - 100k BAL Acquisition

Vote Result: ABSTAIN

Rationale

While it makes strategic sense for Aave to purchase BAL tokens and deploy them into veBAL, especially from the perspective of potentially increasing usage/adoption of GHO when it is deployed, there are still open questions around whether it makes sense to execute this purchase at the current moment given market conditions and the need to be prudent with treasury finances. There has also been no deeper analysis conducted on the quantitative risk posed by this purchase at this time. The original Snapshot was passed in May 2022, when market conditions were markedly different, and given the current state of the market, we are not sure whether it is prudent to buy more BAL at the current time and deplete the treasury.

We appreciate Matthew and Sakul’s responses, with our concern around the price of the acquisition being answered. The intent to stimulate adoption and demand for GHO upon launch is well noted, but this can be done via the 200k BAL that has already been acquired. There is a lack of clarity around the incremental risk/benefit for acquiring more BAL at the moment, especially with current market conditions. There has also been no decision made about whether to go forward with veBAL or auraBAL, which should be made prior to purchasing BAL since it increases clarity for the DAO.

Even though we are supportive of the strategic partnership with BAL and the alignment that is achieved by purchasing BAL tokens and converting them to veBAL/auraBAL, we are choosing to ABSTAIN on this proposal due to the open questions around prudence and risk in the current environment.

ARC: Add OP as Collateral to AAVE v3

Vote Result: NO

Rationale

Optimism is an important part of the Ethereum ecosystem and its integration with Aave is beneficial for both Aave and Optimism. However, market conditions today are risky, and the risk of listing OP as collateral to Aave v3 has not yet been established. Therefore, it is prudent to revisit this proposal when the risk analysis has been completed. For the future, the DAO should also endeavour to create a clear, transparent process for new assets that wish to list on Aave, including risk analysis, technical review, community discussion, etc.

Risk Parameter Updates for Aave V2 ETH Market (2022-11-12)

Vote Result: YES

Rationale

Demand by suppliers to supply REN and use it as collateral is very low, with utilisation at 6.19%. APY for suppliers is also very low at 0.05%, which indicates low incentive to supply. The borrow market is also paused because of a previous proposal (https://app.aave.com/governance/proposal/111/0), and revenues from it are miniscule at around $200 (borrow usage from users using REN as collateral * borrow interest rates * reserve factor). Given these facts, and that the market is extremely risky at the moment and risk of contagion is high, temporarily freezing the REN market may be more prudent for Aave.

A counterpoint is that risk of insolvency is low, and therefore even in difficult market conditions, if the risk is low, the market should still function to encourage usage. However, given that the risk/benefit analysis is not compelling enough to keep REN on the platform, freezing the market may be safer given the time lag in the governance process if risk spikes up given market volatility.

We have therefore decided to vote YES for this proposal.

1 Like

Risk Parameter Updates for Aave V2 ETH (2022-11-13)

Vote Result: YES

Rationale

Given that we voted in favour of the proposals to freeze the REN and CVX markets, BAL has been simulated to have as much risk as the above two assets. Therefore, given the current market environment, we have decided to vote in favour of this proposal. Balancer’s strategic relationship with Aave has been considered, and given the higher risk of V2 ETH, we feel it is more prudent to consider listing BAL in a safer environment on V3 ETH when it launches.