Thanks for this post @MarcZeller! We are in favor of this proposal as we believe the risk rewards for the deployment on BNB chain would be great for Aave.
In tandem timing wise, we also like to supplement onto the initial parameters suggested above with some background on BNB Chain and arguments for why we should Deploy Aave v3 onto BNB Chain.
Important reasons why Aave v3 should be deployed to BNB Chain:
- Deploying onto BNB Chain would help Aave tap into the growing number of Defi apps that are currently populating the ecosystem. Most notably being the recent Uniswap v3 deployment.
- The chain offers high speeds, low fees, and low latency.
- There is yet to be a “blue chip” money market on BNB Chain. Hundreds of millions of dollars of “idle” liquidity is sitting around waiting for a trusted and reputable project to park funds into.
- Even with the recent bear, BNB Chain has done a great job at maintaining users & TVL, and are poised for immense growth in the near future.
- BNB Chain has unique features that can eventually enhance Aave v3’s functionality such as staking and cross-chain support.
- This would open up a unique and underserved region for Aave, being the APAC markets. Millions of unique users would be introduced and onboarded to Aave.
- BNB Chain has a strong and very passionate and active community. This would provide valuable feedback and support for our team and quickly identify pain points and issues if they were to arise.
- New markets and customer demographics would open the doors for a new set of investors. In addition to retail, many institutional investors would now also consider using Aave.
- Being home to many projects previously unconnected to, deploying on BNB Chain would provide many opportunities for collaboration and partnership with BNB native projects.
Further, we believe that BNB Chain is primed and represents a great time for a major well known money market to deploy onto.
From Aave’s perspective, we can expect:
- Hundreds of million, if not billions of TVL, entering into the ecosystem. Emphasizing what we believe to be a critical lack of a “blue chip” and widely known money market; this will result in what we think will be a “mad dash” of funds being transferred over to Aave upon deployment
- 1+ Million users testing and trying out Aave on BNB Chain for the first time
- Synergies with Aave and Aave related products. Onboarding and marketing to millions of new potential customers.
Additionally, with many of the other proposals we have posted in the past with regards to deploying Aave v3 onto other chains, we like to add a holistic review and analysis of the chain in order to add some more context on the chain as a whole. Figured we’d add here as well to strengthen the proposal and add to above.
BNB Chain
BNB Chain is a decentralized Layer 1 blockchain that is compatible with Ethereum Virtual Machine (EVM) and employs Proof of Staked Authority (PoSA) as its consensus mechanism. Presently, the network has 26 active independent validators, and the goal is to increase this number in the near future. The BNB Chain comprises two interconnected chains: the BNB Beacon Chain (previously known as Binance Chain) and the BNB Smart Chain (previously known as Binance Smart Chain). The network is renowned for its short block time, with an average block time of 3 seconds, and low transaction fees.
As mentioned earlier, the BNB Chain has an extensive DeFi ecosystem, with the second largest Total Value Locked (TVL) after Ethereum. PancakeSwap, the DEX with the third highest TVL across chains, is the largest project in terms of volume and TVL, providing liquidity for numerous supported assets. Other DEXes such as BiSwap, DODO, and iZumi also play a significant role in enhancing the liquidity available on the chain. Venus is currently most prominent BNB lending project, ranking fourth in the list of biggest lending protocols.
Liquid Staking has also been gaining more traction since late last year, delivering new use cases to BNB holders. Wombat is the largest stableswap protocol on BNBChain, handling volumes of more than $500M on peak days. The trading volume of BNB DeFi Dapps is also among the highest across chains, strengthening the argument for the deployment of Aave onto BNB. It is also the chain that, in recent times, hosts the most daily active users, the most transactions, and the most unique active wallets.
Data
- As mentioned, at time of writing, BNB chain has over $7.5b in TVL. It is important to note that that this has held steady over much of this bear market.
- BNB Chain maintains 1 million unique active addresses transacting each day and has had an average of about 4 million transactions per day in recent months.
- There are over 1.5 million unique 1 day active addresses. In the last 7 days there have been 6.95 million unique active addresses and 25.6 million in the last 30 days.
- The main assets by volume are BNB, BTC, ETH, CAKE, USDC, and USDT. @marczeller, we think looking into adding CAKE with lower parameters might be worthwhile. We propose for CAKE:
| Risk Parameter | CAKE |
|---|---|
| Isolation Mode | NO |
| Enable Borrow | NO |
| Enable Collateral | YES |
| Emode Category | N/A |
| Loan To Value | 50% |
| Liquidation Threshold | 55% |
| Liquidation Bonus | 15% |
| Reserve Factor | 20% |
| Liquidation Protocol Fee | 10% |
| Borrow Cap | 400,000 |
| Supply Cap | 1,000,000 |
| Debt Ceiling | N/A |
| uOptimal | 75% |
| Base | 0% |
| Slope1 | 10% |
| Slope2 | 150% |
For specifics and analysis pre-deployment, we look forward to @gauntlet and @chaoslabs’s analysis on these initial markets and heed to their expertise.
Technical Specs
BNBChain prioritizes security and reliability. It is supported by several oracle platforms, including Chainlink, Pyth (through Wormhole), Binance Oracle, and The Graph. The network also has public RPCs like Nodereal, Ankr, InfStones, Quicknode, and Chainstack, and BSC Scan serves as the reference token tracker.
To maintain the security of the network and its smart contracts, BNBChain undergoes regular audits conducted by reputable security providers such as Quantstamp, PeckShield, VeriChain, CertiK, all of which are publicly available. Furthermore, BNBChain has several initiatives centered on security, such as Avenger DAO, a community-led project that aims to protect users from possible scams, malicious actors, and exploits.
With relation to bridging cross-chain governance, There are a variety of options available for Governance cross-chain infrastructure including: Layer Zero, Celer Stargate, and HyperLoop.
Finally,
We believe launching with a CAKE market would be beneficial not only from a pure free market stance, but would also establish friendly connections with many BNB native projects and have positive externalities for the protocol as a whole.
Combining our recommendation to add in the BNB Chain Native $CAKE with @marczeller’s initial proposed assets gives us:
| Risk Parameter | CAKE | BNB | WBTC | BETH | WETH | USDC | USDT |
|---|---|---|---|---|---|---|---|
| Isolation Mode | NO | NO | NO | NO | NO | NO | NO |
| Enable Borrow | NO | NO | NO | NO | NO | YES | YES |
| Enable Collateral | YES | YES | YES | YES | YES | YES | YES |
| Emode Category | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Loan To Value | 50% | 65% | 70% | 60% | 80% | 82.5% | 70% |
| Liquidation Threshold | 55% | 70% | 75% | 70% | 82.5% | 85% | 75% |
| Liquidation Bonus | 15% | 10% | 10% | 5% | 5% | 5% | 8.5% |
| Reserve Factor | 20% | 10% | 10% | 15% | 15% | 10% | 10% |
| Liquidation Protocol Fee | 10% | 10% | 10% | 10% | 10% | 10% | 10% |
| Borrow Cap | 400,000 | N/A | N/A | N/A | 80.000 | 20,000,000 | 20.000.000 |
| Supply Cap | 1,000,000 | 5,000,000 | 5,000 | 20,000 | 100,000 | 50,000,000 | 50,000,000 |
| Debt Ceiling | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| uOptimal | 75% | 75% | 45% | 45% | 80% | 80% | 80% |
| Base | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Slope1 | 10% | 6.1% | 7% | 7% | 4.8% | 4% | 4% |
| Slope2 | 150% | 100% | 300% | 300% | 80% | 80% | 80% |
As mentioned, we look forward to further analysis by @gauntlet and @chaoslabs, and are very happy, @Marczeller, these discussions are circling back up and happening again! We look forward to the temperature check and discussion.