Request for Feedback on post-vote Temp Check #1 (Mode Deployment)

Governance
4

Thank you for taking the time to share your thoughts EzR3aL.

I very much appreciate your outlook with concern of fragmented liquidity, competing native forks (Fantom case study), and assurances a new deployment would be a net positive for Aave stakeholders.

Regarding your main concern about the likely outcome after the Mode airdrop campaign is over (although we plan to continue incentives programs for an extended time), as well as the conclusion of points campaigns of many involved protocols. After these bootstrapping phases conclude / slow down, we predict two things will happen:

  1. There will be a large deleveraging event, as loopers (on all ecosystems) will unwind positions that were open to farm points.

  2. Newly levered positions will seek less emission-based yield opportunities. Mode is actively building out these opportunities.

The core culture of the Mode team and ecosystem partners is building a robust real-yield DeFi ecosystem that will thrive in a post-points era. Our high-level road map includes*:

*Integrating Aave aAssets and GHO will be explored throughout the eco

Establishing the DeFi baseplate for capital to park and earn conservative yield. This includes:

  • Lending markets that participants trust (i.e. Aave)
  • Curated bond-curve DEXes for different exposure preferences of LPs while facilitating low intra-eco slippage
    • 80-20, index pools, etc.
    • Incentivized CL and full range pools
    • Stableswaps
  • Connect the baseplate to the yield layer
    • Transforming non-yield bearing assets to yield-bearing synthetics on the Mode bridge
    • Facilitating intra-ecosystem yield opportunities with strategic assets and markets
      • Supporting CDP protocols that can intake yield bearing assets and mint native stables
      • Supporting and growing yield markets (PT-YT)
      • Integrating innovative yield generating protocols that utilize volatility harvesting (arbitrage fee-capture) and managed v3 vaults that optimize idle liquidity
  • Grow and incubate the yield layer, while attracting BTC liquidity
    • Include strategic assets into perps counterparty LP to drive additional yield and demand for those assets (incl. BTC synthetics)
      • Facilitate intents-based markets to drive additional yield, both onchain and via RWA routes
    • Bring additional yield-bearing assets from other chains to pair with existing eco
    • Develop and expand our existing relationships with BTC-fi protocols and chains, providing attractive opportunities for newly-minted BTC synthetics seeking efficient DeFi-powered yield (vs. trad. staking).
    • Introduce existing and novel governance mechanisms to help command yield strategy and sourcing

As we all know, all of the above is easier “said than done”. However, I personally believe in our convictions and resources, respect the perspectives and pasts that enable us to build with a vision, and ultimately like our odds of success of creating an environment conducive to sticky TVL and confident stakeholders. It would be a privilege to have Aave onboard for our journey.

To address your recommendation of commitments to liquidity bootstrapping, liquidity mining events and marketing:

In addition to the Plan for Temp Check #2 in the OP post, Mode would like to also include:

  • Paying the $15,000, plus gas reimbursements for Catapulta, the Development Service Provider for new Aave v3 instances on new chains.
  • $100m committed to seed strategic, supported assets within 30 days of deployment by working with network LPs.
  • Earmarking an expected 1m per year in points incentives (based on current rates to incumbent lending markets) over 3 years.

We believe this is a reasonable amount to make Aave markets attractive while being conservative enough as to not attract mercenary farmers.