Proposal: Llama <> Aave


We outline a 12-month proposal to work with Aave on treasury management, protocol upgrades, growth, and analytics.

The Proposal


Llama is one of the most active contributors to Aave. We hope to deepen our engagement with the community and ensure that Aave is a market-leading protocol for many decades to come.

Aave currently has $10 billion of liquidity and is growing rapidly. Aave V2 is deployed on four markets and V3 is deployed on six markets, with more in the works. Aave DAO has supported community initiatives like Aave Grants DAO, Bored Ghost Developing (BGD), and Gauntlet, which have served to advance the protocol.

To continue its rate of growth, the community needs to onboard proven contributors who can drive value to the Aave ecosystem. Skilled teams that have the knowledge, trust, and alignment can meaningfully contribute to growing Aave.

Llama has received grants from Aave Grants DAO over the past 12 months for work that includes treasury management, protocol upgrades, DAO to DAO partnerships, and analytics. Aave Grants has recommended that we move from short-term grants to a longer-term work scope funded through governance, allowing us to drive more impact to the Aave ecosystem.



Llama works with DAOs on protocol engineering, treasury allocation, and analytics. Our customers include Aave, Nouns, Uniswap, dYdX, Lido, Gitcoin, Maker, Radicle, PoolTogether, and FWB. We have implemented protocol upgrades, built treasury strategies and liquidity incentive programs, created bidding interfaces and on-chain indices, and built analytics dashboards and financial reports.

Our Values

  • Rigor. Work done by Llama is of the highest quality. We care deeply about getting the details right.
  • Ownership. We treat the problems of our customers as if they were our own. There is little to no separation between Llama and the DAOs we work with.
  • Trust. We seek to actively earn the trust of our customers. We involve the community in our work and incorporate feedback where relevant.
  • Transparency. We believe in open lines of communication and are comfortable working in a DAO-native manner.

Previous Work with Aave

A selection of our work with Aave includes:

The Proposal

Llama complements BGD, Gauntlet, and others who might emerge by offering support to grow the Aave ecosystem. We focus on three key areas:

  • Treasury Management and Analytics

    • Use the treasury to support and enable the growth of Aave across various networks. This includes:
      • Deploying Aave’s Ecosystem Reserve, Reserve Factors, and Safety Module
      • Hedging to reduce asset price exposure
      • Generating yield for the DAO
      • Managing the associated risk profile of the community’s funds
    • Create a custom-built analytics system (data warehouse) for Aave to provide live insights into the DAO’s financial performance. This system will overcome the challenges of existing analytics platforms like Dune and go beyond the limitations of subgraphs to provide more relevant data for Aave.
    • Generate financial reports and create an interface showcasing Aave’s financial, operational, and investment performance.
  • Growth

    • Grow TVL, revenue, and market share for Aave markets. Our work will include liaising with central exchanges and market makers, deploying Protocol Owned Liquidity within DeFi, and putting forward incentive proposals that will fuel the adoption of AAVE across the ecosystem.
    • Work with DAOs to grow the adoption of GHO and aTokens by integrating them across DeFi and by supporting initiatives that promote the usage of Aave markets.
    • Work with other contributors to deploy and roll out new types of collateral, such as ERC-4626 strategies which enable deposits to earn incentives while simultaneously serving as collateral.
  • Risk Underwriting and Liquidity Analysis

    • Develop a model that shows how GHO interacts with Aave markets and the risk it creates under various market conditions.
    • Work on risk assessments for select assets that propose being listed on Aave.
    • Model veBAL and (potential) vlAURA holdings to achieve a desired level of yield based upon broader market analysis. Include this analysis in growth plans and management of the DAO’s treasury.

The tables below provide examples of the initiatives with which Llama plans to support Aave.

Treasury Management and Analytics

Task Description
Strategic Partnerships

Work with other communities to determine if they are a good match for the Aave community and Aave’s vision/future intentions. Coordinate and deploy all on-chain proposals across necessary platforms.

Acquire assets to accelerate growth or provide a competitive edge. This includes the construction of investment strategies and submission of AIPs to acquire, deploy, and maximize the utility of any acquisition.

E.g. Acquire BAL, deploy to B-80BAL-20WETH, then deploy into veBAL and coordinate / implement DAO voting on BAL incentive distribution.

Yield Optimization

Deploy a portion of the DAO’s funds across diversified strategies of varying risk profiles to earn yield across many networks while maintaining sufficient stablecoin runway and optimizing risk exposure.

Design, model, and deploy investment strategies across various networks via Aave’s governance process to earn yield on assets held in the respective network’s Reserve Factor.

Preference will be given to acquiring tokens that provide extra utility to the DAO beyond governance influence. Llama will optimize for the intersection of risk, including smart contract surface area, and return on investment. These strategies will be biased towards retaining the accrued governance token yield.

Grow Aave’s Revenue

Position Aave’s assets to bolster revenue growth. Utilize assets from the Reserve Factor to unlock and promote the growth of Aave markets and revenue.

Deploy the Reserve Factor to boost Aave’s revenue. Enable the Balancer and Aura strategies to have a meaningful impact on TVL and revenue.

Explore and implement ways to provide downside protection to the Ecosystem Reserve.

Aave’s token price is volatile and the DAO has significant exposure to this single asset.

Reduce asset price exposure through hedging, which may include using derivatives on a rolling basis, to protect against adverse market conditions.

E.g. hedging downside price exposure of the Ecosystem Reserve whilst the Safety Module is heavily concentrated in AAVE.

Optimize the Safety Module (SM)

Create various optimizations for the SM to ensure that it functions with Aave’s increased TVL.

The SM provides a backstop to Aave markets. As Aave’s TVL grows, the SM must grow with it. Aave’s capital is limited and must be managed to maximize the backstop for users.

Deploy upgrades to improve the capital efficiency of the SM and maximize the dollar value of the backstop.

Create risk tiers and enable different types of passive and productive assets to be added to the SM ensuring the auctioning process functions smoothly.

Adjust yield for varying risk tiers while optimizing capital efficiency to minimize overpaying.

Safety Module Performance

Provide detailed analysis of the SM’s historical and current performance relative to TVL, market conditions, and market volatility.

Backtest different compositions of the SM with assets of varying volatility and correlations to Aave’s TVL. Track the DAO’s ability to cover % of TVL on various markets with market price movements.
Shortfall Event Analysis

Model the effect of a shortfall event on the SM’s backstop and AAVE token price.

Develop models that simulate the effect of a shortfall event and how the market would absorb the sell pressure of various assets. Ensure the unlock period is sufficient to enable the governance process to be enacted.
Runway Analysis

Provide analysis that will shape investment, amongst other, decisions across the DAO.

For the DAO to grow in a sustainable manner, sufficient capital must be kept safe to guarantee the longevity of the community.

Model expenses, revenues, and various market conditions. Liaise with other members of the DAO to create a comprehensive forecast of the DAO’s finances. Draw upon input from community members who have received AIP funding and those delivering material improvements across the Aave ecosystem.

Develop a Data Warehouse for Aave

Develop a live, customized, and transparent financial reporting backend solution for Aave.

Develop a data warehouse that combines and transforms on-chain data from numerous networks with off-chain data sources to provide a comprehensive base layer of Aave blockchain data that can be used to build real-time analytics dashboards.

This will enable live financial reporting for the various Aave markets and Aave DAO as a whole.

Accounting Reports

Publish financial reporting statements enabled by the data warehouse.

Provide monthly and quarterly financial statements including income statements, cash flow statements, and balance sheets.

Provide periodic token distribution analyses, transparency on outflows, and more economic analyses. In time, this will be expanded to cover the Aave Grants DAO as well.

Investment Performance Reporting

Provide visibility into each investment strategy, its performance, and associated risks.

Use the data warehouse to provide in-depth analyses of the performance of the DAO’s assets, ROI, recent price valuation, and volatility analysis.

Share this data through reports on the forum and a dedicated website alongside other financial reporting data.

Financial Data Analytics

Identify key financial metrics for Aave.

Develop a UI to display these financial metrics for the community.

Identify the financial metrics that enable community contributors to prepare and write their own financial analysis of Aave.

Some examples of financial metrics are shown below:

  • Financial performance over time
  • Revenue sensitivity analysis showing the effect of changing the Reserve Factor on various lending pools
  • Free Cash Flow analysis


GHO Facilitator Strategies Design facilitator strategies. Bring GHO adoption to L2s.

E.g. Design new use-cases to mint GHO, such as minting against cross-chain assets (without the need for bringing), RWAs, credit instruments, or DAO treasuries.

ARC Market Liquidity Mining Module

Upgrade the Aave ARC market to include a liquidity mining module.

Deploy an upgrade to the ARC market implementing LM functionality (required if incentives are distributed across the market).
New Collateral Types

Work with Balancer to bring a new type of productive collateral to Aave markets and subsequently roll it out across the various Aave V3 deployments.

Collaborate on the creation of new types of collateral which will drive TVL and use of Aave markets.

E.g. Create ERC-4626 strategies that enable BPTs to be deposited whilst enabling users to earn rewards as if the BPT was deposited into an Aura gauge.

DeFi Integrations

Bolster the adoption of aTokens and GHO across DeFi by supporting initiatives that build on top of Aave markets or integrations that create TVL for Aave markets.

Identify and promote new initiatives that will grow TVL and adoption of GHO.

This will span liquidity growth and the integration of AAVE and aTokens into other protocols.

E.g. Create linear pools on Balancer V2 that deposit tokens into Aave markets to earn yield (for example, bb-a-USD).

Protocol Owned Liquidity

Utilize the DAO’s assets to provide Protocol Owned Liquidity.

Research and implement strategies to increase adoption including (but not limited to) liquidity mining, Protocol Owned Liquidity (POL), bootstrapping decentralized exchange liquidity pools, and engaging with market makers who will support Aave’s tokens on centralized exchanges.

Enable AAVE and stkAAVE holders to participate in metagovernance by voting on proposals within other communities in which Aave DAO holds tokens.

Enable, support, and implement any metagovernance initiatives on behalf of the community as it grows and starts participating in other communities’ governance votes.

Risk Underwriting and Liquidity Analysis

GHO Performance & Liquidity

Provide insight into how GHO is created and used across DeFi.

Provide financial metrics that track performance over time. E.g. Velocity, average holding size, holding duration, and deposits into a yield vault.

Track the price relative to $1 on various platforms and price impact versus trade size. Track any deviation from $1 and how the market is responding to correct the price over time. Design and recommend strategies to improve the price relative to $1.

Asset Listing Risk Assessments

Support asset listings by providing a qualitative risk analysis report on the forum that details the initial risk parameters.

Adopt any risk parameters suggested by Gauntlet, provided borrowing is enabled at launch.

Continue to support communities seeking to list their token on Aave markets by performing and publishing risk assessments with suggested initial parameters. Llama has a strong track record of progressing assets from the original ARC to AIP submission.

Liaise with individual communities and support new asset listings, with all efforts outside of the risk assessment funded by those respective communities.

Risk Parameter Amendments

Act to reduce the risk exposure of Aave DAO where appropriate based on qualitative assessments of events across DeFi.

Act to minimize the DAO’s exposure to assets that have changing risk profiles due to idiosyncratic risk events Eg: Freeze FEI reserve before liquidity conditions change.

Note: Llama’s assessments will not overlap with Gauntlet, but rather will complement Gauntlet's efforts.

Asset Liquidation Risk

Show the extent of bad debt across Aave markets and potential liquidation thresholds.

Enable users to simulate what will happen to their assets with asset price changes.

Develop a graphical representation of the distribution of borrower positions across the market. Use this data to support analysis of the SM and commentary around the ability of the SM to provide a backstop in various scenarios.
Liquidity Analysis of Specific Strategies

Aave markets are used to deploy strategies to earn yield which creates concentrated risk on several assets.

Perform selective detailed analysis on those strategies.

Provide detailed analysis of specific strategies and types of users. This will span revenue creation and risks and will provide context for potential impact in a shortfall scenario.

E.g. Tracking liquidity across DEXs, price impact and availability to execute large trade sizes across DeFi for listed assets, impact of variations in price between assets within the strategy (stETH & ETH or MaticX & wMATIC).

Risk Modeling for DAO Investments

Model various risk scenarios to ensure the DAO has exit strategies during periods of market turbulence.

Provide detailed risk analysis (including tail-risk analysis and scenario forecasting) on DAO investments in preparation for deploying the community’s funds via the governance process, taking into account the nature of how DAOs work and how quickly DeFi evolves.

Compensation Model

Llama charges a $2.5 million fee for 12 months. This fee is broken down into three components:

  • $0.5 million paid up front in stablecoins.
  • $1 million paid in stablecoins and streamed linearly over the course of the contract.
  • $1 million in AAVE vested linearly over the course of the contract.

There isn’t much precedent for pricing work involving protocol upgrades, treasury management, growth, and analytics. However, in preparing this proposal, we reviewed similar proposals from BGD, GFX Labs, Gauntlet, Certora, Sigma Prime, and Aave Companies. None of these proposals are perfect comparisons but they may serve as useful reference points.

KPIs we focus on include:

  • Treasury growth
  • Revenue growth
  • Completion of monthly accounting reports
  • Completion of data warehouse
  • Completion of analytics dashboards
  • 0% loss of funds
  • 50% of DAI, USDC, USDT, and ETH from the Ethereum Reserve Factor actively deployed

Engagement Expectations

  • The duration of the engagement will be ongoing, with the initial proposal spanning 12 months. Towards the end of the 12-month period, a new proposal will be drafted and shared on the governance forum.
  • With rare exceptions, payloads will be shared with BGD or Aave Companies before being submitted as AIPs for on-chain voting.
  • We will provide regular updates on the forum with details on our work and will solicit feedback from the community to ensure we continue to uphold the commitments outlined above.

The previous work section speaks for itself. No leap of faith needs to be taken with Llama and the value they can provide for the DAO. Llama is an operator end-to-end from poll to payload.

Our interactions with @helloshreyas, @MatthewGraham, and others on the team have exemplified the values listed above. That said, we have disagreed and expect to in the future on initiatives from asset listing, ad-hoc analysis, and partnership structures. Regardless, Gauntlet has high confidence this team can deliver on critical KPIs to bring this DAO towards a more sustainable future.


Expressing my support or this proposal,

Llama has been a key contributor to the Aave DAO and keen to see it bloom further via DAO funding.


I have personally worked with the Llama team and I think a deeper collaboration with the Aave DAO could make sense, but not in these terms.

I can’t support a proposal of this type with that budget, due to the following:

  • Llama is an entity collaborating with other DAOs, so the collaboration is not exclusive.
  • For what I am aware, the team is relatively small, and the list of tasks is really extensive. Even one of its co-founders is already working close to full capacity as the lead of the Aave Grants DAO. It is difficult to say how realistic is the scope.
  • It is true that Llama has contributed in the past to the Aave community on different proposals (and properly rewarded with grants from the Aave Grants DAO), but I can’t say that the order of technical magnitude of those proposals is precedent enough to consider this quite sizeable budget.
  • Different from the other parties mentioned by the OP, generally with deep history and knowledge of the Aave ecosystem (initial creators/developers of the protocol, security firms collaborating with Aave since almost Aave v1, etc), Llama’s specific background with Aave is not enough in my opinion to present this kind of scope and budget.
  • Regarding the scope:
    • Management and optimization of the holdings of the protocol itself are valuable, but I’m against a systematic approach to this, as security and stability on a protocol like Aave is the highest priority at the current moment. Any continuous engagement in that direction will create really difficult situations for the community to choose between “profit” and risk. Given that, I have no problem with entities like Llama proposing ad-hoc strategies, but I’m fully against having an entity whose role is to optimize these holdings; not at the current moment.
    • Data analytics and financial reports are useful and valuable for the community, that is one of the reasons the Aave Grants DAO has been awarding a lot of funds in that direction. I see value in the items proposed in this direction, but in general, it is a compilation of resources already rewarded out there, and consolidated in 1 place for better visibility of the protocol’s accounting.
    • GHO is approved by the community, but 1) the code is not public 2) is not operative yet 3) it is not possible to predict how its market will look. It is just nonsense to include in scope (and charge for it) the growth and let’s say optimization of a system that is not even yet released.
    • I have communicated this personally previously to the OP on previous proposals, but the the Aave DAO must not compensate a full flow of assets’ listing, only the creation of mechanisms to support teams working on listings. First, if teams have an interest in listing a new asset on Aave, this is a decentralized system, so there are some extra procedures to be done; second, there are already entities (e.g. BGD on the technical side, Gauntlet on the risk side) well funded at the moment improving everything around listings, and helping teams with the technicalities around it. That being said, Llama role in some listings in the past was of a middle-party between Aave and the teams pursuing listings, a really diligent party I can say, but the Aave DAO should not pay for this, as it is already paying on something that heavily overlaps.
    • I think strategic partnerships and meta governance are valuable items, and fitting Llama.
    • On risk-related aspects, I think Llama can provide additional value and be rewarded for it.
    • Data around the Safety Module is also an interesting item in the scope.

In summary, on the current shape, I can’t support the proposal. Only with a reduced scope and budget makes sense in my opinion. I think way fewer items on the scope and a budget in the $1-1.5 million range make more sense for an initial collaboration and to grow the expertise of Llama itself on Aave.

P.S. It is important to highlight again that my collaboration with members of Llama has been always exceptional, they take really seriously the way they contribute to Aave. So my disagreement is exclusive to the terms of the proposal (scope & budget), not in any shape or form with Llama onboarding with Aave.


Hi all, posting on behalf of Avantgarde Finance. We support this proposal directionally. The jobs that Llama lays out, if executed well, will bring great value to Aave. Normally, we would be interested in taking on the treasury management work, and have been preparing a proposal to that end. We’re happy to shelve that for the time being if the community is supportive of Llama taking over this function. We would also offer our support in helping to implement a technical solution that we believe would simplify the process.

An Enzyme vault owned by the DAO and managed by a third party (e.g. Llama) would enable an aggregated view of the treasury’s assets and their allocations, as well as a full and transparent accounting of every transaction undertaken by the manager. We recently announced a partnership with Nexus Mutual where we are managing a vault on the DAO’s behalf using this exact setup.

This implementation is a solution for the three main concerns that we’ve voiced about Llama’s treasury management proposals in the past.

First, we believe that any treasury management strategy should be flexible and be able to adapt to changing market conditions. For example, the allocations Llama suggested in their January post made sense at the time but were outdated within weeks. Gathering DAO-level consensus around specific allocations is not the way forward - instead there should be investment guidelines to which a manager must adhere.

Second, the operational complexity of managing the DAO’s funds using Gnosis Safes and governance votes and the unknowable risks that complexity brings cannot be overstated. Trading from the RF contracts and maintaining a holistic view of the DAO’s balance sheet would be exhausting, requiring governance votes to execute transactions and custom tooling to aggregate and monitor their results.

Third, this complexity would serve to decrease public visibility into and scrutiny of the DAO’s finances. The fewer people who understand how a system works, the more entrenched those individuals are and the harder it is to hold them accountable.

Deploying the Reserve Factor into an Enzyme vault that is owned by the DAO and managed - with contract level compliance and risk-management controls - by Llama allows for flexibility in asset management strategy execution without compromising on security or decentralization. The DAO always maintains custody of its funds, the Enzyme protocol and its supporting infrastructure provide a holistic overview of the Vault’s historical performance via app or API, and the manager has flexibility in adjusting allocations. We have implemented this setup for several DAOs and are happy to help implement it for Aave.

Expressing my support of this proposal — Llama / Shreyas and team have helped pushed the industry forward by offering treasury management support for DAOs. The goal ultimately is to entrust key service DAOs to help support Aave’s ecosystem and its community.


Thank you for your response, @eboado.

It is important to highlight again that my collaboration with members of Llama has been always exceptional, they take really seriously the way they contribute to Aave. So my disagreement is exclusive to the terms of the proposal (scope & budget), not in any shape or form with Llama onboarding with Aave.

We really appreciate your confidence in Llama to serve the Aave ecosystem. BGD has been an important pillar of Aave and helpful to Llama as we’ve engaged with governance. We take all feedback seriously and hope to address them below.

Llama is an entity collaborating with other DAOs, so the collaboration is not exclusive.

This applies to most entities working with DAOs: Gauntlet, Certora, Sigma Prime, and others. Having said that, we take our commitment to Aave seriously - hopefully demonstrated by our past work with the protocol.

For what I am aware, the team is relatively small, and the list of tasks is really extensive.

Demand for our work has grown significantly this year. We have an aggressive hiring plan to keep pace.

Even one of its co-founders is already working close to full capacity as the lead of the Aave Grants DAO.

The role at Aave Grants DAO has been beneficial to gain deep expertise on the Aave ecosystem. We hope to use that knowledge to drive even more value to Aave protocol.

I have no problem with entities like Llama proposing ad-hoc strategies, but I’m fully against having an entity whose role is to optimize these holdings; not at the current moment.

As we have in the past, we plan to design strategies that fit with Aave’s broader strategic goals. Similar to your view, we don’t view treasury management or yield optimization as actions that should be done in silo. We will only propose strategies that help secure and grow Aave, and we will engage with governance and the broader community to discuss and implement any of these strategies.

GHO is approved by the community, but 1) the code is not public 2) is not operative yet 3) it is not possible to predict how its market will look.

Many partners and contributors are already preparing plans to support the launch of GHO. The BAL acquisitions (Aave DAO and Aave Companies) lean into growing GHO via Balancer along with TVL into Aave via Balancer Boosted Aave Pools. As per the Aave community call, GHO has had its first audit and is getting closer to launch. Our proposal is for a 12 month duration and based upon the information we know, GHO is supported by the community. We trust the ARC was posted with intent to launch GHO so it is rational for us to intend to support growing GHO. Increasing revenue through boosting the adoption of GHO is one of the clearest ways to help grow the DAO’s bottom line.

Having said that, if GHO does not get launched for some reason, we still plan to contribute significantly to helping grow Aave through other initiatives. While we tried to be concrete in this proposal, the nature of DeFi and our work involves unpredictability. All we can do is dedicate resources to help grow Aave into a market-leading protocol and be flexible with what that involves.

Aave DAO must not compensate a full flow of assets’ listing, only the creation of mechanisms to support teams working on listings.

We are in agreement here. As mentioned in the proposal, we only charge Aave for risk assessments of specific assets, not for the AIPs and coordination involved outside of the risk assessment. For example, we worked on the MaticX risk assessment on Polygon (Aave v3). We plan to complement the work that Gauntlet and others are doing.

I think strategic partnerships and meta governance are valuable items, and fitting Llama. On risk-related aspects, I think Llama can provide additional value and be rewarded for it. Data around the Safety Module is also an interesting item in the scope.

Appreciate the confidence on these items in our scope.


The previous work section speaks for itself. No leap of faith needs to be taken with Llama and the value they can provide for the DAO. Llama is an operator end-to-end from poll to payload.

Thank you for your support, @inkyamze!


Llama has been a key contributor to the Aave DAO and keen to see it bloom further via DAO funding.

Appreciate your support, @MarcZeller!


Thank you, @imrankhan!



Like the classic novel from Charles Dickens, I think that a Ghost is needed to take us on a journey through the past, present and future needs of the DAO and evaluate this proposal.


Matt was kind enough to summarise what Llama has done for the DAO to date, so I think it’s only fair that we all evaluate their performance.

Llama’s proposal is broadly broken down into:

  • Treasury Management and Analytics
  • Growth
  • Risk Underwriting and Liquidity Analysis

From a control standpoint in a TradFi firm no one individual should be;

  • Making investments
  • Accounting for them
  • Executing them

Llama’s proposal is essentially suggesting we trust them to do just that. It is frankly absurd to say trust us to do the risk analysis on our own investments.

Broadly the content is pretty much unchanged from the various “vision” and “strategy” documents they have produced in the last year. The question is if they were not able to execute on it then what has changed?

I think the major blocker is that we as a DAO haven’t agreed on what Treasury management even looks like and what our vision is. Sure we want reporting and dashboards but do we even want to give individuals control over the treasury and making investment decisions?

Until we have a discussion about our Treasury objectives it seems ridiculous to even discuss having a 2.5m Treasury management contract.

As a DAO if we truly want to decentralise and potentially spend $2.5m for operations, I think we really have to assess what our needs are?

Based on the work Llama have done outside of Treasury it is clear we would benefit from;

  • DAO Operations to manage growth, partnerships & governance (1-2 people)
  • Finance/Treasury members to prepare reports, forecasting, payments, limited investment work (2-3 people)
  • Data scientist to maintain and improve dashboard (1 person)
  • Junior Dev to help with AIPs and low level eng tasks (1 person)

We then have to support:

  • Gauntlet and Chaos should be leading risk work, and any future contracts should push them to include analysis on new listings
  • BGD are handling dev work
  • Aave companies provide additional support with their resources

Before the DAO commits to any further spending I would want to to see a detailed cashflow and spending forecast prepared, ideally by our Treasury managers who are paid to do it, and we should then vote as a DAO on how much budget we want to allocate to each area. Heck I will even throw a burn model together myself now, spoilers alert we’re losing $33.9m before we even consider stkAAVE emissions:

+$18.25m revenue (50k/day)
(-) $16.3m Aave Companies
(-) $12m Grants (ARE WE SERIOUS???)
(-) $10m BDG
(-) $3.3m Chaos
(-) $8m Gauntlet
(-) $2.5m Llama

I think everyone feeding on the soon to be carcass of this DAO needs to realise this is not a never-ending money pit! The bull market is well and truly over and AAVE is not a $5bn cap token. We simply cannot have the burn rate that we do in the current environment if we want to survive.

Treasury managers at a minimum should be assessing the impact of spending requests in proposals and giving the community guidance on whether they are affordable!

We should hold contributors accountable for spending requests and enforce transparency around contractor costs. I believe people should be paid well for their work and companies should make profits, but who is getting what should be clear. This holds true for all proposals whether its Aave Companies, BDG, Gauntlet or Llama.

My intention is not to dismiss entirely of the contributions that Llama and particularly Matt Graham have made to this DAO. Matt particularly seems to be one of the most active members of the community and would definitely support him coming on with the DAO fulltime in a Growth/Operations type role if he ever wanted.

But that does not mean that Llama deserves a $2.5m sweetheart deal, in an uncompetitive process after submitting an unsolicited bid. Especially given the track record of delivering ok but rather mediocre work, and a focus more on asset listing and proposing ideas than executing on treasury work.

Some questions I have for Llama about their bid;

  • Who is Llama? What are your backgrounds outside of Llama?
  • How many full time employees do you have? What are their roles? How many are dedicated to Aave?
  • Have you raised Venture Funding? Do those same VC’s vote on Aave proposals?
  • For fairness would you abstain from voting on proposals that you benefit from?
  • How do you manage conflicts that arise between Aave and your work with other DAOs?
  • How did you arrive at the $2.5m quote? How much of this is profit for investors?

A well-structured Strategic Finance team is necessary for long-term protocol growth and we (Messari) have full faith in Llama’s ability to execute on these deliverables having worked with them in the past.

In the spirit of transparency, we want to throw an alternative, even complimentary, option on the financial reporting side where we can provide quarterly reports on a recurring basis. This would serve to satisfy the necessary ongoing reporting on fundamental metrics with the added benefit of distribution through Messari’s channels hitting 250k crypto professionals along with our downstream distribution channels on the Bloomberg terminal, S&P Capital IQ, and Refinitiv which combined reach over 1 million active users across nearly every major fund, financial institution, and large corporate.

Given the economies of scale of our research and data science teams, we can provide this for $100,000. We also have extensive experience already working with Aave building out the data infrastructure and covering the protocol through long-form research. Examples of our previous work include:

Financial reporting is only as good as the number of people it informs and we believe this will help keep existing stakeholders informed while also bringing in additional capital through the wide distribution of these reports.


Thanks for this post.

While 2021 and a part of 2022 was highly profitable for the Aave protocol (60m$ annualized revenue at peak) it’s true that current market conditions makes the protocol less profitable.

V3 on mainnet, GHO revenue & Portal fees are three fast-approaching pathways to generate more revenue for the DAO that might help the protocol to go back into the comfort zone of sustainability we experienced.

But your post rings true, we’re not in a “bull market” and the protocol currently live over its means.
While the Ecosystem Reserve can act as some form of buffer, Safety incentives (1100 AAVE/day) and the common occurence of budget request asking for AAVE make the inevitable day of the reserve running dry closer and closer.

That being said, if I would agree money could be spent more scarcely, most spending are important, V3, risk analysis, grants and especially BGD are net positives for the protocol.

What would be the current revenue and market size of Aave if we stayed at the V1 stage? most likely close to zero.

I agree “the burn” is likely too high now. here’s some toughts for this proposal & more broadly for the DAO :

  1. stop normalizing paying with AAVE, the supply of AAVE is finite without inflation, the ER will run dry let’s not actively burn this reserve unless it’s absolutely necessary.
  2. budget request & allocations should consider the average quarterly annualized revenue of the protocol, I called out gauntlet several times on their bogus “% of deposited funds” calculation, only the money that actually get into the DAO treasury matters, the rest is irrelevant.
    current one is 16M$, budget request should consider this.
  3. I’m not a fan of long term engagement for a brand new tech sector, some requests are for long term work such as dev (BGD, V3) and for these, long term make sense, outside of this, a quaterly budget is more fit.
  4. if we want the ER to last, Safety module Incentives tapering needs to be on the table sooner than later.

for these reasons, and considering upcoming pathways of revenue for the protocol and the probability of
change of market conditions in the next few months, I’m now supportive of a tuned down, 6-month term llama reworked proposal with more details.

and based on Llama predictable success, and hopefully in better protocol revenue solution, reassess in six months the funding of Llama.


Here’s my balanced take on this proposal:

Llama is the best in the biz in helping out Protocol DAOs and are pioneers in figuring out how Service DAOs can support these new types of orgs (D2D economy). Treasury Mgmt, Growth, and Risk Mgmt are all ridiculously hard functions, so providing these services for multi-billion dollar ecosystems is valuable, and there aren’t many organizations that are even capable of doing these things.

That said, the proposal is expensive for a 12mo period and uses a comparative pricing model from other orgs, which I don’t support. There’s little detail on headcount / hours / individuals involved / lift for performing these services. I’d like to see that added. I don’t think bottoms-up pricing should be applied here but perhaps a fixed fee plus value-based incentives tied directly to measurable KPIs. For a 6mo period, a fixed fee in the range of $200-400k with another $500k in KPI-tied bonus incentives seems like a more reasonable range. Then it can be adjusted for the next 6mos or 12 mos.

I think the proposal is directionally accurate but likely needs to be reworked based on the feedback in this thread. I’d suggest 1) narrowing scope (possibly removing GHO/etc) 2) reducing the timeframe to 6mos and 3) doing a fixed fee + KPI-tied incentives pricing model.

Side note, I love seeing these discussions happen in public with lots of thoughtful people involved. Very cool. :purple_heart::ghost:


Llama is the best in the biz in helping out Protocol DAOs and are pioneers in figuring out how Service DAOs can support these new types of orgs (D2D economy). Treasury Mgmt, Growth, and Risk Mgmt are all ridiculously hard functions, so providing these services for multi-billion dollar ecosystems is valuable, and there aren’t many organizations that are even capable of doing these things.

Really appreciate the support, @corbpage.

I don’t think bottoms-up pricing should be applied here but perhaps a fixed fee plus value-based incentives tied directly to measurable KPIs.

We are open to doing KPI-based pricing and ran the idea by a few people. For example, we could have a base fee plus a performance-based bonus tied to total revenue generated for Aave through Llama proposals.

However, any KPI has trade-offs. A revenue-based KPI could lead to trade-offs on the risk side. A counter to that is: (1) Llama would never make decisions that are sub-optimal for Aave because then our contract would not be renewed (2) we are executing all proposals through on-chain governance so the community can vote against any of our proposals if they believe we are taking unnecessary risk.

TLDR: we’re open to a KPI-based bonus if the community is open to it.

reducing the timeframe to 6mos

We are not open to a 6-month contract because of a few reasons. First, we have already worked with Aave for one year and implemented a long list of deliverables. So hopefully that gives everyone a good sense of our competence and ability to execute. Second, there’s a big upfront investment with a lot of this work. It requires us to invest engineering and financial resources into delivering high quality output, so it’s best for Llama and Aave for the duration of the engagement to be longer. 12 months gives sufficient time to plan and execute on items that are of highest value to Aave.

However, we are in favor of Aave DAO having the option to cancel our contract and stream at the end of 6 months if the community is not satisfied with the quality of our work. We will provide periodic updates on our progress, so the community can get a clear sense of whether it wants to make this decision. We will add this to the final proposal!


We support this proposal and like the budget cuts that have happened from the first draft to this final proposal. It’s evident that the team behind Llama is incredibly strong and the past work speaks for it self. We would like to see more data regarding hours of work, who’s on the team, etc. but as a whole think this is a pretty standard amount for the work given/promised.


Thanks for the proposal. I am really excited to see how the DAO is evolving, engaging with a variety of entities that can serve to the Aave ecosystem in a synergistic and sustainable way.

I agree with the majority of the points mentioned here and wanna highlight some of them quickly:

  • Lack of information / background about Llama capabilities and quote
  • Too wide scope / tasks not clearly defined or doable at the moment
  • Ongoing engagement, with a large budget for 12 months as first contract
  • No exclusivity and offering sensitive services such as treasury mgmt

I would love to see a rework of this proposal based on the feedback so the DAO can enjoys the great job Llama provides. I would suggest:

  • Provide more information about resources, people and roles, budget breakdown
  • Narrow the scope, give a work plan with measures of priority, effort and feasibility
  • Since its an ongoing engagement I do not see the issue of starting with a 6 months period and half of the budget

Sorry to keep the team waiting - @Llamaxyz (@MatthewGraham & @HelloShreyas) have been great colleagues and partners within the Aave community.

From Governance to Grants, these two and their team have produced tangible results for the protocol and ecosystem. I am glad it is progressing to a long-term relationship, rather than one-off Grants.

I will echo the sentiment shared above: Llama is qualified and deserving, but this is a large and arduous scope. While it is valuable, it seems like these initiatives will quickly become overwhelming.

Some solutions which make the pricing more palatable:

Both Marc and Corbin outline two options that we as delegates and partners alongside Llama would be more supportive of. This solution feels less scary but rarely happens in practice:

I would advocate you to re-consider a 6 month period or retroactive funding for any work that goes beyond this work - the comments above express hesitancy with the length of the engagement.

I do think Llama / other orgs can engage with other DAOs and are best to do this. It leads to niche expertise, built by hands-on experience with other products and communities.

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I value Llama’s contribution to DeFi but I don’t think this proposal is makes sense in the current form. My main concern is shared by many: it’s too broad. It will be nearly impossible to assess how well this partnership is going and it’s hard to define success. @EbenezerGhost sums it up pretty well.

I would suggest to break this down into a few smaller pieces with clear KPIs and a limited scope so that the community actually has a chance to understand, debate and then measure the different parts. My question to you would be: if you had to limit your collaboration on three key projects, what would they be, why are they important, what would you define as success and what are the resources you would need for them?

I would suggest you propose separate proposals that we can then discuss and evaluate. I would be very supportive of smaller scoped projects as I generally think Llama has done good work in DeFi.


Not in favor of such proposals which should look for funding from AAVE Grants instead of Protocol.

The numbers asked for are insanely high and will open the flood gates by all AAVE partners/contributors/associates to ride back on similar proposals and run the treasury dry in months to come.

This will be disastrous for AAVE and the community while these partners/contributors/associates take their cut and move along to the next protocol.