Title: [TEMP CHECK] - Aave DAO’s $ARB Airdrop Allocation
Author: @marczeller - Aave-Chan Initiative
This Temperature Check discusses the potential options for the Aave DAO’s allocation of 2.7 million $ARB tokens received from the Arbitrum L2 airdrop. We propose four options for the community to consider and provide feedback on.
The Aave DAO is set to receive an airdrop of ~2.7 million $ARB tokens from the Arbitrum L2. We are seeking community input on the best course of action for utilizing these tokens to benefit the Aave ecosystem.
Options for $ARB Token Allocation
- Keep the tokens and participate in Arbitrum governance as the Aave DAO: This option involves holding onto the $ARB tokens and using them to actively participate in Arbitrum governance, thereby contributing to the development and decision-making of the Arbitrum L2 ecosystem.
- Use the tokens to fund a Liquidity Mining program to support the growth of Aave V3 Arbitrum Market: This option would allocate the $ARB tokens towards a Liquidity Mining program designed to incentivize users to participate in the Aave V3 Arbitrum Market, promoting growth and adoption of Aave on the Arbitrum L2.
- Sell the tokens for stablecoins or ETH to support the Aave DAO treasury: This option involves converting the received $ARB tokens into stablecoins or ETH, which would bolster the Aave DAO treasury and provide additional resources for future development and initiatives.
- A mixed option that combines elements of options 1, 2, and 3: This option proposes a combination of the previous options, distributing the $ARB tokens to participate in Arbitrum governance, fund a Liquidity Mining program, and support the Aave DAO treasury.
The Aave-Chan Initiative (ACI) is not compensated in any form for creating this Temperature Check proposal. This TEMP CHECK has been prepared solely to facilitate community discussion.
At the time of writing, the author owns ~$50k worth of assets on the Arbitrum L2.
Temperature Check: Gather community feedback and assess sentiment towards the proposed options.
ARFC: Based on the Temperature Check Snapshot results, proceed to the ARFC stage for further discussion and finalization of the chosen option(s).
AIP: If the ARFC stage Snapshot is successful, submit the proposal as an AIP for voting and on-chain governance approval.
I think it would be best to implement an Liquidity Mining program at the GHO launch.
I would either stick to option1 and participate in the future of Arbitrum. Maybe there will be significant decisions made that are important for the protocol.
Or option 2 and use it for bootstrapping GHO when launching.
Stablecoins on L2 just make sense because of fees.
As the Aave-Chan Initiative, we would like to express our support for “Option 4” in the $ARB token allocation discussion. We believe that the Aave DAO does not currently have significant voting power in the Arbitrum ecosystem, and given the lack of mature “meta-governance” structure and governance coordinators, focusing on this aspect may not be the most efficient use of resources at this time.
Securing a portion of the DAO treasury in stablecoins with the $ARB tokens will help support Aave’s ongoing efforts and expansion. Additionally, with the upcoming release of GHO, a strategic Liquidity Mining investment to incentivize GHO minting could be an efficient use of of part of the Airdrop.
We look forward to potentially discussing a more detailed breakdown of this “Option 4” during the ARFC stage, based on the community’s feedback and sentiment from the Temperature Check and if this option reach the majority of governance vote during the Snapshop vote of the TEMP CHECK stage.
why not sell part of the received $ARB in order to do 2 things?
-Incentivize the GHO
-Initiate a pool of ETH/GHO and USDC/GHO to help make it liquid on the markets. Because even if it is possible to mint GHO the liquidity of stablecoin plays an essential role in its utility.
Also it will allow the arbitrages so that it preserves at best its pegg.
Why not even incentive the pool.
25% per each option sounds a win win to me anyways.
IMO any airdrop from a decentralized protocol should stay on that same protocol, then I realy don’t appreciate option 3 even if I have interests in the Aave DAO treasury.
This airdrop comes just in time to help Aave in GHO launch. I would use 50% for liquidity on $GHO/$ARB, means 28-30% to mint GHO and 20-22% to create an LP on an Arbitrum DEX.
Then I would use the other 50% for the ACI option 2 that could benefit the entire Arbitrum ecosystem, included Aave V3.
Thank you for the suggestion @MarcZeller
While it would be great for the DAO to participate in $ARB governance, practically this has been difficult for other groups since snapshots are time-limited and each vote in $ARB gov would mean spinning a separate governance process within the DAO. Additionally, we’d also need to modify existing proposal flows to accomodate these types of voting in fast track mode. A potential solution could be to form a meta-governance group within the DAO and delegate voting rights to this group. Another option is to split the voting power between these groups ARC: Incentivized Delegate Campaign (3-month) - #5 by lajarre
I really like the idea of incentivising liquidity. If we are to delegate voting rights to a multi-sig or divide them between ‘n’ governance groups then we can execute both options [1&2] completely.
Considering that these tokens were distributed by the Arbitrum Foundation in the hopes of the community helping with the growth of the Arbitrum DAO, I would personally feel more comfortable if option 3 were discarded altogether if possible. This idea to distribute ARB to protocols as well as users is interesting, but I doubt other protocols will do it if communities end up trying to get rid of their tokens on the open market.
Instead of the current option 3, I would suggest something similar to what I proposed for ParaSwap’s $OP allocation for grants, and instead allocate these $ARB as extra potential rewards for Aave Grants DAO grantees building in the arbitrum ecosystem. This could ‘pass on’ the rewards to the builders in the community and encourage development in Arbitrum.
Alternatively, if we still want to opt for a ‘soft sell’ option, I would add list allocate it as a form of protocol-owned liquidity (perhaps even with GHO?), that way the ecosystem gains an additional benefit through its growth in liquidity depth.
Other than that though, like many others I feel option 4 is best.
Option 1: Somewhat redundant given  will not be a 1-time dump of tokens, but rather emitted over a long period (1 year?), so it were to be done in quarterly tranches then the majority of the tokens stay within the DAO’s control for voting.
Option 2: Seems like a great use. Rewards users and will get some TVL back from Radiant. In tracking on-chain activity there has been a lot of TVL that has left AAVE for Radiant since Rv2 launched.
Option 3: Do not support. This is a small airdrop vs. the overall value of AAVE, and lowering the ARB/ETH spread seems like a bad faith response.
Option 4: n/a
Option 1: 20%
Option 2: 80%
Option 3: 0%
Option 4: n/a
Generally, I am not a fan of option 3 but in support of 1 & 2. Personally, I believe that the DAO should be patient and hold $ARB for the foreseeable future.
Many have pointed out that using ARB for GHO LM would benefit GHO growth and the DAO. Holding ARB into the future also provides the DAO flexibility to perform LM, pay service providers, and partake in ARB Governance.
I am firmly against selling any ARB at the current time.
From the options you mentioned, I see option 2 as the best.
- Arbitrum governance airdropped $ARB as an incentive for contributing to their ecosystem, so it’s reasonable for Aave DAO also to contribute to Arbitrum DAO by creating a mechanism like liquidity mining which will promote activity on the Arbitrum blockchain and also help Aave v3 market grow on this blockchain.
This proposal has been escalated to snapshot stage.
If option 1, 2 or 3 wins a majority of the vote, ARFC stage will focus on the implementation of the selected option.
if option 4 wins a majority of the votes, ARFC stage will discuss the repartition of the allocation between options 1, 2, 3 and the implementation of the vote.
if Abstain & NAY win, the proposal will be considered immature, ARB tokens will be kept and another proposal can be published a later date to restart the conversation.