LBS Blockchain Society Delegate Platform

[TEMP CHECK] Safety Module Update Part I - Migrate AAVE/wETH

Vote Result: Option 2 - Migrate to a 80/20 AAVE/wstETH v2 pool

Rationale

We understand there is a need to migrate the Aave Safety Module as a result of the now deprecated Balancer pool. We support Chaos’ recommendation for migrating to a 80/20 AAVE/stETH v2 pool to improve capital efficiency from stETH while limiting the impact of impermanence loss in the equally weighted pool. Therefore, we will vote YES for Option 2 on this proposal.

Upgrade the safety module to v1.5 PART 2

Vote Result: YES

Rationale

Given our vote in favour of PART 1 of upgrading the safety module to v1.5 according to our vote here and rationale here, we will also vote YES in favour of this proposal.

Aave V2 Interest Rate Curve Changes (4-21)

Vote Result: YES

Rationale

This is the on-chain vote for this Snapshot proposal that we voted in favour of according to our rationale posted here. Therefore, we will vote YES in favour of this AIP as well, and are aligned with Gauntlet on the need to minimise governance overhead and another Snapshot vote even with the inconsistencies outlined in the forum post.

[ARFC] Consolidate Collector Contract & Secure Service Provider Runway

Vote Result: YES

Rationale

There is a need to secure Aave’s runway to pay service providers in streaming contracts and there is a clear shortfall from the Aave aUSDC stablecoin runway, with the cost of service providers grossly exceeding v2 aUSDC revenue. Given that there are multiple types of USDC and other long-tail stablecoins on Aave which are not being deployed to earn yield, it is better to consolidate these to pay service providers, with the same being applied to the fees accumulated on Paraswap which would be better utilised in paying service providers. Therefore, we are in favour of this proposal and will vote YES.

[ARFC] Migrate Holdings from v2 to v3 and acquire wstETH and rETH

Vote Result: YES

Rationale

Redeeming assets from Aave v2 and depositing them into v3 makes sense given the broader move to v3. Converting wETH and ETH to wstETH and rETH also makes sense to maximise Aave’s revenue potential and increase the capital efficiency of the treasury. Therefore, we will vote YES in favour of this proposal.

[ARFC] Add LUSD Arbitrum v3

Vote Result: YES

Rationale

Listing LUSD as a borrowable asset but not as a collateral (0% LTV) helps Aave diversify from the current dominance of centralised stablecoins such as USDC used for borrowing. It has proven to work well on Ethereum V2 and V3 and Optimism V3, so adding LUSD to Arbitrum V3 will not be a surprise. We therefore will vote YES in favour of this proposal.

[ARFC] BUSD Offboarding Plan Part II

Vote Result: YES

Rationale

The second phase of BUSD offboarding plan is inevitable given the current situation. Implementing the new parameters will effectively reduce the amount of liquidity in BUSD and encourage users to switch to other stablecoins. Therefore, we will vote YES in favour of this proposal.

[ARFC] Activate emode for rETH Aave Ethereum V3 Pool

Vote Result: YES

Rationale

Incorporating rETH into emode will make it easier for users to gain access to the asset and create more use cases for rETH like leveraged strategies, so we are in support of the proposal. Given that both risk providers are in favour as well, we will vote YES.

Aave V3 Interest Rate Curve Changes (4-27)

Vote Result: YES

Rationale

This is the on-chain vote for this Snapshot proposal that we voted in favour of according to our rationale posted here. Therefore, we will vote YES in favour of this proposal as well.

Risk Parameter Updates for Ethereum v3 (05-09-2023)

Vote Result: YES

Rationale

Given that LUSD’s borrow cap has been reached, it is necessary to update it. Since the proposed increase is in line with Gauntlet’s Borrow and Supply Cap methodology, we will vote YES in favour of this proposal.

[ARFC] Acquire BB-A-USD and deposit 50% into both Balancer and Aura Finance

Vote Result: YES

Rationale

The expected yield from the BB-A-USD deployment is 9.3%, which is significant. While there is some smart contract risk from using Aura Finance, it is mitigated by Aura having had 3 audits and an Immunefi bug bounty, and by the underlying pool being a core pool at Balancer. Moreso, since Aura is a fork of Convex, its smart contracts are battle tested. Deploying only in the Balancer pool would reduce yield across Ethereum assets by 1-1.25%, which is significant given the expected overall portfolio yield is ~5%.

[ARFC] Add rETH to Aave V3 Arbitrum Liquidity Pool

Vote Result: YES

Rationale

rETH is already listed on Aave Ethereum v3 and expanding it to Arbitrum is a logical next step. Adding more established LSTs like rETH to Aave drives revenue as users deposit the LST and borrow ETH. This is most evident on Ethereum where the LST- and wETH-yield-maximising loop is the source of the vast majority of wETH borrowing demand. Another important point is that of LST diversification - Rocket Pool offers Aave v3 users on Arbitrum an alternative to wstETH, which is very important. Lastly, Chaos Labs and Gauntlet are in favour of this proposal and the risk parameters presented match those on Ethereum v3 and are a combination of the most cautious parameters presented by both risk providers, enabling appropriate risk management.

AGD Approval

Vote Result: YES

Rationale

This is a simple proposal that corrects the Aave Grants DAO aUSDT allowance that was incorrectly set previously. The originally specified amount was $812,944.90 and this proposal gives allowance to AGD for v2 USDT for this amount. Given the simplicity of this proposal and given that it only corrects an incorrectly set prior allowance, we will vote YES in favour of this proposal.

MaticX Supply Cap Increase Polygon v3

Vote Result: YES

Rationale

This is the on-chain vote for this Snapshot proposal that we voted in favour of according to our rationale posted here. Therefore, we will vote YES in favour of this proposal as well.

[TEMP CHECK] - Add support for RPL on Ethereum v3

Vote Result: YES

Rationale

RPL is the native governance and utility token of the one the largest decentralised liquid staking protocols (and one of the largest liquid staking protocols). Adding it to Ethereum v3 will allow it to be borrowed for voting purposes (governance) and to deploy staking pools (utility). The suggested risk parameters appear sensible in light of the market cap and trading volume of the token. Setting an appropriate borrow cap that is validated by the risk providers is critical given the low on-chain 24H trading volume of around $720K, and we will vote YES in favour of this TEMP CHECK with the caveat of a suitable borrow cap being set.

[ARFC] Add ENS to Aave V3 Ethereum

Vote Result: YES

Rationale

Given the need to migrate to Aave v3 and promote adoption, and given that ENS is listed on v2 Ethereum, it is logical to list it on v3 Ethereum with its more granular risk controls and allow ENS to be borrowed to a certain level as specified by the proposed borrow cap. The proposal by Chaos is conservative in terms of risk parameters and we agree with their approach. Therefore, we will vote YES in favour of this proposal.

[ARFC] Add 1INCH to Aave V3 Ethereum

Vote Result: YES

Rationale

Given that the risk parameters have been proposed by Chaos Labs, and that 1INCH is already listed on Aave v2 Ethereum, it is important to list it on v3 with the appropriate risk parameters in order to encourage migration from v2 to v3. The borrow cap seems sensible in light of the 24H trading volume of $1.6M through on-chain DEX sources. The supply cap seems high, but we recognise it reflects Chaos’ simulation data. Moreso, Chaos have confirmed that the cap was derived using Chaos’ stress testing methodology, considering the on-chain liquidity, and is also meant to allow room for migration of positions from V2. On top of this, the debt ceiling also serves to limit protocol exposure. Therefore, we will vote YES in favour of this proposal.

[TEMP CHECK] - Add support for fUSDC on Ethereum v3 Pool

Vote Result: YES

Rationale

Although Ondo Finance is a well respected institutional DeFi player, Flux Finance is a relatively new protocol. The proposal makes no mention of contract audits (notwithstanding that this is a Compound v2 fork with minor amendments). The market cap of the token is very low at around $7M. No risk parameters have been proposed yet but we consider that these should be commensurate with the low liquidity of the token.

While fUSDC is not a traded token, it can be minted and burned by deposit and withdraw of the underlying USDC token. This makes secondary liquidity unnecessary since the redemption mechanism is such that it can be redeemed 1:1 for USDC in all situations, unless the underlying Flux Lend platform is compromised, which is difficult since it is a KYC’d platform. The fUSDC oracle also uses the USDC price at all times, further tightening the link between the two tokens and ensuring that it is, by proxy, as liquid as USDC.

We will vote YES in favour of this proposal, but with two caveats: validation by the risk providers and appropriate caps set, and audits of the underlying Flux Finance contracts being completed. Without these being completed, we will vote NO in any AIP.

[TEMP CHECK] Add ARB to Arbitrum Aave v3

Vote Result: YES

Rationale

Listing the ARB token on Aave would be a sound growth strategy with minimal risk. Moving forwards, it will bring additional revenue opportunities to Aave as well as improve user experience, which contributes to building a more vibrant Aave v3 Arbitrum market. As a result, we are in support of the proposal and will vote YES.

Fix Rate Strategies Issue on Aave v2 Polygon

Vote Result: YES

Rationale

This proposal is a fix for the issues that have resulted from AIP 224 passing, with the new interest rate strategy contracts applied to WETH, WBTC, USDT, and WMATIC not allowing users to perform actions involving those assets. Given that all funds are safe and there is no extraneous impact of the fix, it is sensible to pass this AIP and resolve the issues. Therefore, we will vote YES in favour of this proposal.