LlamaRisk is pleased to share our monthly community update for May 2024, highlighting our activities over the past month and our focus areas for the upcoming period.
Highlights
Began our engagement on May 1st, 2024 - the full scope can be found here.
Established communication lines with key stakeholders and delegates, including a biweekly coordination meeting with @ChaosLabs to enhance collaboration.
Worked on 2 explainer articles: GHO Stablecoin and Aave V3 Parametrization, Oracles and Liquidations, expected to be published next month.
Focus for Next Period
Improve our response time to ARFCs, adapting to a faster pace compared to our typical workflow of producing longer-form research articles and in-depth analyses
Publish drafted educational articles on GHO and Aave V3 risk parameters
Follow up on the evolution of Maker’s endgame strategy and collateral types, especially USDe
Continue developing our Aave-specific asset onboarding and risk parameter frameworks
Deep dive into Kelp’s rsETH
We welcome any feedback or suggestions from the community. Please do not hesitate to ask questions, ideas, or areas where you would like more focus from the LlamaRisk team. Special thanks to @ACI and @ChaosLabs, who have been tremendously helpful and welcoming in the onboarding process.
Expanded team capacity by onboarding an additional full-time analyst
Developed internal tooling to monitor governance forum posts, snapshot votes, and market parameters
Upcoming Focus Areas
Complete and publish rsETH comprehensive analysis
Attend EthCC to engage with Aave community members, delegates, and ecosystem partners
Continue educational explainer article series (parametization, oracle, liquidation, irm)
Conduct research on tradeoffs of using market vs. exchange rates
Monitor ongoing loyalty (points) programs and analyze their implications for listed assets in Aave
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like to see increased focus from the LlamaRisk team.
Started a review of the proposed Umbrella and AAVEnomics update to share our queries and observations in the next few days.
Started working on a tool to simulate different slashing conditions
Quarterly report on spending
In addition to the month’s deliverables and in keeping with our original commitment to transparency and accountability, we are pleased to provide our first quarterly report on spending.
Spent 100,283 out of 125,000 GHO claimable in first three months
76% of funds used directly for applied research
We continue ramping up our involvement, onboarding talent, and appointing dedicated resources to Aave. Below is our forecasted spending for the next period:
Ramping up our involvement with the GHO stablecoin
Continue the educational explainer series; we have an article in the works on ChainLink CCIP and its use in Aave
Continue research on tradeoffs of using market vs. exchange rates
Monitor ongoing loyalty (points) programs and analyze their implications for listed assets in Aave
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
Tradeoffs of using market vs. exchange rates and usage of CAPO framework
Framework for loyalty points programs
Meetings and feedback:
Met with several delegates to gather feedback on our work
Upcoming Focus Areas
Our main priority is to conclude the assessment and make recommendations for the WBTC custody changes. The proposed BUILD GSM integration with BlackRock is also a key area of interest; we are exploring the legal implications and opportunities for integrating RWAs.
Other areas of research include:
GHO user analytics: researching the user profile of GHO to gain insights into adoption trends, collateral usage, user portfolios, and cross-protocol activity
Tooling for historical slippage at different swap sizes
Research on the safe level of asset-specific capitalization for Umbrella
Slashing simulation, which we intend to open-source
Monitor bot for RWA redemption buffer
Further research on supply cap limits (l2 concentration) and usage of cross-chain liquidity for liquidations
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
Engaged with delegates to gather feedback on recent parameter adjustments and research outputs
In discussions with Chainlink to join a RWA integration task force
Upcoming Focus Areas
Progressing with research on using GHO for liquidations and comparative analysis of CCIP and OFT
Preparing to present the DAO with a proposal to renew our risk provider engagement
Further monitoring and analysis of the WBTC transition process with BitGo and BitGlobal
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
Overhaul of our onboarding framework, which will include the following:
General Asset Framework
Asset Probation Framework
Chain Qualification Framework
Due diligence on several new assets at temp check stage likely to be considered for onboarding (AUSD, SCR, EURC, FBTC)
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
[ARFC] Onboard cbBTC to Arbitrum Instance - Liquidity on Arbitrum does not justify onboarding, we asked Coinbase to work towards setting a minimum viable level of liquidity
@ChaosLabs’ launch of Edge. We want to congratulate our peer and acknowledge their contribution . We’ve set up monitoring during the pilot phase to ensure the robots are not misbehaving.
[TEMP CHECK] Aave Instances Strategy Shift - We are very much on board with @ACI’s vision and have signaled we are working on a revised suite of frameworks to support this initiative.
Initiated outreach to Service Providers and Delegates to gather feedback and improve coordination across the ecosystem
Upcoming Focus Areas
We are working on our Asset Probation Framework (APF) and gathering feedback from Service Providers. This will help establish when and how assets should follow a probationary onboarding track, defining success metrics to monitor while maintaining direct onboarding paths for established assets.
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
Ethena Reserve Fund Drawdown Methodology V2 - Refined reserve fund methodology for Ethena, which is critical for maintaining USDe’s solvency with Aave’s sUSDe liquid e-Mode.
MPCs in Protocol Treasury and Operational Context - Comprehensive analysis of MPC wallets in DeFi, examining their advantages over multisigs, evaluation frameworks, and security best practices for protocol treasury management.
Community Engagement
Continued outreach to Service Providers and Delegates to gather feedback and improve coordination across the ecosystem.
Upcoming Focus Areas
We posted a 2024 yearly recap here, where we highlight our plans for the year. Our engagement and service to Aave DAO remain front and center.
We will continue focusing on key initiatives and delivering outstanding value for the DAO, with efforts to collaborate with other SPs, such as @ChaosLabs. An example of this is a joint proposal that will be submitted shortly to facilitate further growth of USDe within Aave while mitigating key risks.
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
LlamaRisk presents our January 2025 monthly update, summarizing key activities and outlining upcoming priorities.
Highlights
Recommendations and inputs
Asset onboarding
[ARFC] Onboard Pendle PT tokens to Aave V3 Core Instance - Supporting but advising delayed onboarding due to Ethena exposure risks and recommended two pricing methods to address PT valuation challenges. Pricing PT token is key here, we’ve explored different options and laid out our recommendation.
[ARFC] Add EURC to BASE Aave V3 - Supporting while highlighting concerns about the lack of public audit reports and the absence of a Timelock for upgrades.
[ARFC] Onboard ggAVAX to Aave V3 Avalanche Instance - Recommended a cautious onboarding with a single siloed E-mode, highlighting risks from unaudited smart contracts and centralization under Multisig Labs.
[ARFC] Deploy Aave on Rootstock Network - Supporting with emphasis on rUSDT borrowing against RBTC while highlighting lower security guarantees of its ERC-20 token bridge.
[ARFC] Deploy Aave v3 on BOB - Highlighted early-stage ecosystem with low stablecoin TVL (noted GHO opportunity), centralized network operations, and absence of a public fraud-proof system.
[ARFC] Deploy Aave v3 on Mantle - Supporting onboard with conservative parameters while highlighting concerns about the incomplete fault-proof system and absence of bug bounty.
[ARFC] Deploy Aave v3 on Sonic - Supporting with low initial caps while highlighting concerns about the unclear upgrade management process. @bgdlabs recently posted their own analysis, which should accelerate deployment.
Collaborated with @ChaosLabs on a joint proposal, followed by addressing community concerns through detailed analysis.
Upcoming Focus Areas
Preparing for the release of Umbrella
Analyze and make parameter recommendations for new assets and markets.
Recommendation for legacy/underutilized assets offboarding
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
LlamaRisk presents our February 2025 monthly update, summarizing key activities and outlining upcoming priorities.
Highlights
Recommendations and inputs
Asset onboarding
[ARFC] Add bCSPX to Aave V3 Gnosis Instance - Recommended onboarding as collateral-only, highlighted pricing concerns, and provided legal commentary on regulatory implications for Aave.
[ARFC] Onboard tBTC to Aave v3 on Arbitrum - Supported onboarding with a focus on using the BTC/USD feed for pricing and recommended a trigger switch mechanism with a PoR feed for user protection.
New Chain
[ARFC] Deploy Aave v3 on Ink - Supported onboarding while highlighting the early-stage DeFi ecosystem (low TVL) and non-availability of Chainlink data feeds.
[TEMP CHECK] GHO Gas Token Framework - Endorsed the framework, emphasizing the planned native bridge and additional functions aimed at increasing GHO usage and supply.
[ARFC] Deploy stataUSDC GSM on Base - Supported deployment with 0% swap fees while cautioning about potential unexpected volatility in GSM deposits.
[ARFC] Add sUSDE to Aave V3 Base Instance - Supported onboarding with conservative parameters and alignment with Aave Core’s sUSDe stablecoin E-Mode setup while emphasizing the low sUSDe supply on Base.
ETH Denver Stable Summit - Delivered a talk exploring stablecoin and asset risks in DeFi, emphasizing qualitative risk assessment methodologies.
Newsletter: This Week in Aave - Launched a weekly newsletter providing a concise roundup of Aave governance updates for stakeholders and users.
Upcoming Focus Areas
Operation Spring Cleaning - Introducing a rating system and a new dashboard for existing partners, focusing on delivering clear recommendations on critical security metrics for assets across DeFi.
Preparing for Umbrella release and methodology for optimal capitalization per asset.
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
[ARFC] Add stS to Aave v3 Sonic Instance - Supported onboarding while highlighting an OPERATOR_ROLE misassignment to the deployer EOA, which was subsequently fixed by the team.
[ARFC] Add AAVE token to Aave V3 Base Instance - Supported onboarding as collateral-only on Base with conservative parameters due to sufficient liquidity, distribution, and established presencee.
New chain
[ARFC] Deploy Aave v3 on Plasma - Engaging with Plasma’s team to address information gaps, as the network’s early stage makes issuing a recommendation not possible.
[ARFC] Deploy Aave v3 on megaETH - Provided preliminary support for deployment, with asset recommendations to follow as mainnet launch approaches.
[ARFC] Deploy Aave on Soneium - Supported deployment while noting reliance on bridged USDC and USDT due to the absence of natively minted alternatives.
GHO related
[ARFC] Launch GHO on Gnosis Chain - Supported deployment while emphasizing GSMs’ role in fostering GHO growth and enabling sGHO roll-out.
[TEMP CHECK] GHO Aave Savings Upgrade - Recognized the potential benefits of the implementation while highlighting the risk of USDC yield dilution due to increased sGHO supply via stataGSMs.
Collateral Risk Assessment - pufETH - Published a collateral risk assessment, analyzing system architecture, dependency management, smart contract security, oracle integration, market risk, and access control.
Community Engagement
Newsletter: This Week in Aave - Continued delivering weekly roundups of Aave governance updates while enhancing content with deeper insights for stakeholders and users.
Upcoming Focus Areas
Operation Spring Cleaning - Launch is just around the corner, with a dashboard for asset scoring based on access control, security, legal, dependency, and transparency metrics for DeFi protocols.
In the process of peer reviewing and backtesting our methodology for Umbrella liquidity targets.
Monitoring Chainlink SVR V1 (Smart Value Recapture oracles) while providing support and analysis for further parameterization and roll-out.
We welcome community feedback and suggestions. Please share any questions, ideas, or areas where you would like increased focus from the LlamaRisk team.
. We’ve set up monitoring during the pilot phase to ensure the robots are not misbehaving.