Hi Aave fam,
I’m Jorge, a co-founder of Aragon and CEO at Aragon One, the company that has developed most of Aragon’s infrastructure to date.
I’d like to make a proposal for Aave to support ANT as a collateral asset. We think being able to lend and borrow ANT on Aave would open up several exciting opportunities for both Aragon and Aave.
ANT, the native token of the Aragon Network is already a well traded token with average daily trading volume in excess of $40m and tradable on most major exchanges including Binance, Huobi and OKEX.
A natural progression is to now create an ANT lending market and we can’t think of a better place to do that than with the Aave community. Being able to borrow and lend ANT would enable holders to:
- Increase exposure to bonded ANT assets or other ANT based lockdrops
- Create interest bearing aANT that can both be staked in other protocols (a necessity for an insurance product for DAOs we are currently researching) and loaned out to DAOs with unsecured loans via Credit Delegation (we have tons of ideas for uncollateralized DAO to DAO lending without legal agreements)
- Increase voting power in the Aragon Network DAO to vote on important proposals
- Engage in ANT farming
- Create leveraged ANT trades leveraged derivatives
To kick off the ANT lending market on Aave, the Aragon Association and a number of other well known institutionals looking to put their ANT to work are ready to seed the lending market with over $10m worth of ANT.
Future Aave x Aragon collabs
Besides from developing an ANT lending market, there are other initiatives that we’re excited to develop with the Aave community. Over $350m worth of assets are currently secured by Aragon DAOs and we expect that number to surpass $1 billion by the end of 2020.
We’re interested in exploring a deeper integration with Aave that would enable Aragon DAOs to:
- Deposit their entire vault of supported assets as collateral in Aave
- DAO to DAO loans using Aave Credit Delegation
- Convert specific assets in their vault into aTokens
- On-ramp off-ramp to fiat (assuming this eventually be possible with Aave)
Other interesting things that Aragon could help Aave with are:
Incredibly excited about everything that we can build together.
I for one believe that both the addition of ANT as a collateral and the further collaboration between Aragon and Aave is a spectacular idea. I hope we can put it up for a vote and implementation after the migration and V2 kickoff is enabled by the community.
I second this. ANT will be a hugely important asset as defi progresses!
We at P2P Capital are very excited to have ANT moving forward in DeFi, building around a financial infrastructure around it, and of course, allowing more people to participate in Aragon Network DAO, and hopefully in following networks such as Aragon Chain.
Disclaimer: Delphi Digital holds both LEND and ANJ tokens
We are very much in favour of this proposal and excited to see both teams explore the design space for collaboration. We are working on a longer-term proposal for the Aave ecosystem which we believe aligns well with some of the future ideas, enabling Aave to become a credit protocol that allows ecosystems like Aragon to boostrap their own credit markets and backstop the risk themselves.
It’s worth remembering that Aragon’s AUM fluctuates between $200-400M depending on the day and the total value governed (combined market cap of protocols that use Aragon for its governance) is well above $3B. This is a lot of value that Aave can tap into. Similarly, there is a large amount of unused credit on Aave which could be used to fund DAO development.
Generally, we’re very excited about the long-term potential of Aave + Aragon enabling both collateralised and uncollateralised DAO to DAO lending. To begin with, most of this could be done with the current credit delegation feature, with reputational damage acting as the primary deterrent for non-payment. Eventually, I think you could have loan covenants defined using an Aragon Agreement, issued using Aave and enforced programatically and using the Court. Objective covenants could be enforced programatically whereas subjective covenants could be ruled upon by the court. For instance, think of something like an EU Development Fund type loan where the amount to be repaid depends on whether certain objective and subjective milestones are hit.
Ultimately, we see Agreements and Court as core primitives for advanced credit markets. With Aave being the leading credit platform, we see a lot of potential for a combination of Aragon and Aave enabling a much wider design space of potential loan products and enforcement options.
This collaboration has a lot of potential. I think AAVE and Aragon can both benefit greatly from the proposed ideas. Let’s make it happen!
As a market maker for ANT markets we are excited by the amount of involvement and effort Aragon has had so far in Defi governance and now hopefully AAVE. We are looking forward to supplying liquidity to help these initiatives gain momentum. We also believe a lending market will spur the potential for building an options market, as well as leveraged derivatives in ANT.
would be great to see this implemented!
I would love to see this implemented too!
ANT Risk Analysis
ANT is the governance token of the Aragon Network a smart contract system to manage unstoppable organizations on the blockchain in an efficient and decentralized manner. Aragon is now one of the most popular architecture for DAOs, with the system securing $350m of assets.
ANT Smart contract Risk: D
The ANT token started migrating to its V2 in October to enhance functionalities and reduce gas costs. Holders are slowly migrating which results in little battle testing of the token; yet ANT is a fork of uniswap liquidity shares which have been tested.
A technical smart contract review has identified a multisig retains control over minting - this is problematic for listing on the Aave Market covered by the Safety Module.
ANT Counterparty Risk: C-
Aragon Network is a permissionless DAO system where ANT holders vote on proposals. There are currently nearly 20,000 holders of ANT but only a minority has migrated to V2. Furthermore Aragon Network provides the decentralised infrastructure:
- Aragon Govern which allows anyone to create their own DAO
- Aragon Court a decentralised oracle solution.
The control over the minting retained by a multisig results in a low Trust.
ANT Market Risk: C +
The ANT token has experienced high volatility this summer but has since been less volatile than the rest of the market. The token is traded on the top exchanges and has good volume.
Liquidation Threshold 60%
Liquidation Bonus 15%
Reserve Factor 35%
Variable Interest Rate Model ~ Collaterals
Any comments on this?
‘Decentralized Court’ Aragon Association Hit With Flurry of Resignations
DAO = decentralized = 100% transparency ?
100% true / trusted?
“I nary longer admit the spot that I utilized to emotion to work,” helium wrote. “I judge it nary longer reflects my values, nor the values of the Aragon Manifesto.” Light was with the AA for 3 years, according to his blog."
If Aragon Association or Aragon One have sufficient control over protocol or its governance, these recent developments may be grounds to downgrade counter-party risk.
Counter-party risk assesses qualitatively how and by who the currency is governed. We observe difference degrees of governance decentralisation that may give direct control over funds (as backing, for example) or attack vectors to the governance architecture which could expose control and funds. The counter-party risk is measured from the level of centralisation corresponding to the number of parties that control the protocol as well as the number of holders and the trust in the entity, project or processes.
@Alex_BertoG @jorge do you think this is a concern for Aave?
Thanks for everyone for contributing into the discussion of this proposal. There are two interesting points I would like to highlight. First is that ANT has minter on multi-sig 0xbeefbeef03c7e5a1c29e0aa675f8e16aee0a5fad. The multi-sig consists of 9 keys and 6 keys are required to mint ANT, practically meaning that the token supply is in control of those keys. While having minting functionality brings flexibility especially in token economics there are some security considerations that needs to be taken into account mainly for the reason that listing ANT would mean that the asset can be used as a collateral and requires harder scrutiny upon listing.
The ways to solve the issue is to either set the minter to 0x0000 or to give the minting functionality to the governance. Since the multi-sig does allow up to 50 keys, it might be that 6 out of 9 keys is not sufficient to secure the supply of ANT and more community participants are required. This would help to reduce the risk profile of ANT when considering the listing which affects the risk parameters. I believe the team is looking for the latter option most likely.
More interesting consideration is that recently key members of the Aragon Association (AA) team has left AA including developer team members. While decentralized protocols run in autonomous fashion, first years of decentralized communities is spent on building a sustainable community that contributed into the innovation and development, and during those early years most of the innovation/management might rely on the founding team. While the events might not directly affect the asset itself it might affect other risk components of the assets such as liquidity and appreciation within the ecosystem.
By all means I think Aragon is fascinating project and the team has contributed very much into the DAO ecosystem over the years (and will continue to do so), as for what the events go I believe the situation is unique and should be of course openly discussed by the community.