[ARFC] Chaos Labs Risk Parameter Updates - Increase Debt Ceiling for SNX and MKR on V3 Ethereum - 01.31.2024
Vote Result: YES
Rationale
Given the risk analysis by Chaos and the close monitoring of the positions supplying SNX and MKR, combined with the debt ceilings almost having been breached on v3 Ethereum, this proposal makes sense to us. Therefore, we will vote YES in favour of this proposal.
[TEMP CHECK] Onboarding weETH to Aave V3 Ethereum
Vote Result: YES
Rationale
Restaking has quickly become one of the hottest sectors in DeFi and ether.fi is at the forefront of it. ether.fi is a long-standing player in DeFi and has shown how it values decentralisation and solo staking through its innovative work with Obol Labs and the usage of DVTs. Restaking is relatively risky but usage of ether.fi is high and current eETH holders will bring increased usage and fees to Aave. We feel it would be beneficial to understand the risk of this proposition from Chaos Labs and Gauntlet’s perspective and take it through the TEMP CHECK phase. Therefore, we will vote YES in favour of this proposal.
[ARFC] Set Aave Chan Initiative as Emission Manager for fdUSD on BNB Chain Aave V3
Vote Result: YES
Rationale
With the onboarding of fdUSD and the lack of traction in the BNB market, it makes sense for ACI, who onboarded fdUSD onto Aave, to act as an emissions manager and distribute the $30k of incentives for the fdUSD market plus the seed liquidity from fdUSD ecosystem partners. Therefore, we will vote YES in favour of this proposal.
[ARFC] Deprecate Aave V2 AMM Market - Step 2
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
[ARFC] Orbit Program Renewal
Vote Result: ABSTAIN
Rationale
As a beneficiary of the Orbit programme, it solidified our desire to maintain an extremely high participation rate, engage deeply with the community, and have airtight, defendable rationales for all our votes. As such, we welcome this opportunity to renew the Orbit program. However, given our rationale and post on the Orbit renewal forum post, we think it would be better for us to ABSTAIN on this vote.
[ARFC] Set ARB Emission Admin to Gauntlet
Vote Result: YES
Rationale
Setting Gauntlet as the Emissions Manager for the ARB distribution to migrate from bridged USDC.e to native USDC makes sense, especially given that Avara and Karpatkey could not take the role on and the Arbitrum Foundation has engaged Gauntlet to do so. Therefore, we will vote YES in favour of this proposal.
[ARFC] Set osETH & SWISE Emission Admin to StakeWise
Vote Result: YES
Rationale
Enabling StakeWise to act as the osETH/SWISE Emission Admin to incentivise usage of osETH when it is added to v3 Ethereum makes sense. Therefore, we will vote YES in favour of this proposal.
Retroactive Bug Bounty Pre-Immunefi
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
[TEMP CHECK] Integrate Oval for the BAL & SNX Ethereum V3 Markets
Vote Result: ABSTAIN
Rationale
This proposal has generated a LOT of healthy discussion and it is undeniable that there is a lot of benefit in Aave exploring solutions to tackle OEV going forward. I’d also like to commend the UMA team, especially @hal2001 and Bobby for endlessly engaging with and explaining the various facets of the Oval solution to me.
In my opinion, for a topic as sensitive as OEV, which will impact a core part of the Aave protocol (liquidations) from a risk and security perspective, I believe a more comprehensive framework and program is needed to find the most appropriate solution for Aave. While I think that the Oval solution has significant merit, the security implications have just not been explored enough and there has been no comparison with any other solutions - for example, the ones proposed by @MarcZeller above. Even if Oval may win out against those solutions, I feel it is important for a DAO as large and mature as Aave that a proper, streamlined process is implemented which allows Oval to win out on its own merits rather than by virtue of being the first solution presented, even if it may end up being the best solution at the end of the day.
As such, it would be better to structure and run a comprehensive framework and program to craft an OEV solution that is most suited to Aave’s requirements (e.g., cross-chain, completely decentralised, etc.). The program should include all of Aave’s key stakeholders (e.g., BGD Labs, ACI, Gauntlet, Chaos Labs, etc.) along with providers who have built or expressed an interest in building solutions to tackle OEV (UMA, Chainlink, etc.). While passing this TEMP CHECK would enable Oval to be analysed by Chaos Labs and Gauntlet, it may be better to not conduct this assessment in a silo with specific requirements attached (e.g., the suitability of deploying Oval on the BAL/SNX markets). Rather, it would be better to allow multiple solutions to be presented, qualified out, and judged in comparison with each other.
On the other hand, given how this proposal has opened up a critical topic for Aave and the clear effort the UMA team has put into designing Oval, along with the clear merits of their solution, it would be extremely unfair to vote this TEMP CHECK down.
Therefore, I will ABSTAIN on this proposal but look forward to working together with all Aave stakeholders and the UMA team to craft an OEV solution that is closely aligned to the Aave protocol’s unique requirements.
Chaos Labs Risk Parameter Updates - Increase Debt Ceiling for SNX and MKR on V3 Ethereum - 01.31.2024
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
Set Aave Chan Initiative as Emission Manager for fdUSD on BNB Chain Aave V3
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
[ARFC] Set OP Emission Admin
Vote Result: YES
Rationale
Setting this SAFE as the Emission Manager for USDC rewards across Aave v3 Optimism makes sense. Therefore, we will vote YES in favour of this proposal.
[ARFC] Set ETHx and SD Emission Admin to Stader Labs
Vote Result: YES
Rationale
Enabling Stader Labs to distribute ETHx and SD rewards across Aave v3 Ethereum makes sense. Therefore, we will vote YES in favour of this proposal.
[ARFC] Amend Safety Module Emissions
Vote Result: YES
Rationale
Supporting the GHO peg is crucial and GHO’s supply needs to expand; it cannot do so without the peg being strengthened, and diverting the AAVE rewards from stkAAVE and stkBPT towards stkGHO is logical. Reducing the GHO borrow rate would not make sense since users would borrow GHO and sell for USDC. GHO’s use cases can only be improved if the supply expands, which can only be done once the peg is much stronger. Therefore, it is logical to try and strengthen the peg as much as possible, and we will vote YES in favour of this proposal.
[ARFC] Merit - A New Aave-Alignment User Reward System
Vote Result: YES
Rationale
As voted in the Merit TEMP CHECK according to our rationale here, we are in favour of the Merit experiment. Making it clearer that the rewarded actions are to borrow wETH and borrow GHO, which are especially profitable for the DAO, simplifies the program and is a step in the right direction. This will help with GHO borrows, increase usage of GHO, and drive revenue to the DAO, which is the right call to make.
The arguments that this proposal is ‘unfair’ because of the 100% dilution for using non-aligned protocols like Morpho Optimizers do not make sense. Firstly, the dilution is only of rewards, not anything else - which is completely fair, since using the Optimizers diverts from Aave protocol revenues. The DAO is completely in the right to reward users who bring more revenue to the protocol, and not reward those who drive revenue away. This is a form of incentive alignment that is only possible in crypto. Secondly, the reward system incentivises users to use Aave and not other competitor protocols - this is standard business practice and cannot be seen as anti-competitive, especially since Aave DAO can and should protect its revenues. Lastly, using $5M of Aave’s own profits to reward users doing more profitable actions for Aave, in turn driving increased revenue and profit to the protocol, make sense - especially as the first iteration of this program.
Therefore, we will vote YES in favour of this ARFC.
Reserve Factor Updates (February 15, 2024)
Vote Result: YES
Rationale
This is the latest in a series of RF updates on Polygon v2 and we will vote YES in favour of this proposal as well.
[ARFC] Enable Metis as Collateral on Metis Chain
Vote Result: YES
Rationale
This is the ARFC for this Snapshot TEMP CHECK that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
ARFC. Stable rate deprecation
Vote Result: YES
Rationale
Given that the stable rate has been progressively deprecated and the fact that this partial deprecation of the stable rate has caused technical overhead to the protocol, BGD thinks that the better solution is to deprecate stable rates and then disclose the bug. The bounty for a critical bug has also been communicated well in advance, and as BGD and Certora have both classified this bug as critical, the $1M bounty makes sense. Splitting the payment in 50/50 aUSDT and AAVE tokens is logical as well. Therefore, we will vote YES in favour of this proposal.
MaticX Supply Cap Increase in Polygon V3
Vote Result: YES
Rationale
This is the on-chain vote for this Snapshot ARFC that we voted in favour of according to our rationale here. Therefore, we will vote YES in favour of this proposal as well.
[ARFC] Chaos Labs - Update WETH IR on V3 Arbitrum and Optimism - 02.16.2024
Vote Result: YES
Rationale
Given the trend observed by Chaos Labs, if the WETH borrow rate decreases further, the market will become more efficient and WETH borrows will increase, leading to higher revenue for the protocol at a similar level of risk, given that Aave prices stETH:ETH 1:1 with the underlying exchange rate and low liquidation risk exists in potential wstETH market price movements. The suggested change from Chaos Labs can potentially increase utilisation on the Arbitrum and Optimism markets and increase revenues by ~$50K. Therefore, we will vote YES in favour of this proposal.