TEMP CHECK: Aave V3 Deployment on the Spiderchain (Botanix Labs)

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TEMP CHECK: Aave V3 Deployment on the Spiderchain (Botanix Labs)

Author: ACI

Date: 2024-11-13

Proposal Overview:

This TEMP CHECK seeks to gauge the Aave community’s interest in deploying Aave V3 on the Spiderchain, the leading Bitcoin EVM L2 developed by Botanix Labs.

Botanix Labs proposes this integration to expand Aave within the emerging Bitcoin DeFi narrative, with the first Bitcoin L2 with a full DeFi ecosystem and the largest community of users - including a new market of Bitcoiners transacting on chain for the first time. Upon mainnet launch, Botanix will also present to the market its synthetic 1:1 representation of Bitcoin on the L2, which will be the most decentralized form of “wrapped” Bitcoin in the EVM ecosystem.

This can help diversify the type of Bitcoin assets on Aave, especially considering its acceptance by the Bitcoin community. Botanix also intends to incorporate the GHO stablecoin throughout the ecosystem to further strategically align with Aave, providing incremental revenue upside for Aave DAO.

Summary:

The Spiderchain is the first fully decentralized EVM-equivalent Layer 2 on Bitcoin, where the ease and versatility of EVM meets the decentralization and security of Bitcoin. Leveraging Bitcoin’s Proof-of-Work (PoW) as a Layer 1 for base settlement and decentralization, Botanix Labs will use a Proof-of-Stake (PoS) consensus model, where the stakes (represented by bitcoin) are securely stored on the Spiderchain, a distributed network of decentralized multisigs safeguarded by a randomized subset of participants. Botanix runs on Bitcoin, with BTC as the gas token and settlement layer, and yield accrued back to stakers in native BTC. The Spiderchain is the most performant Bitcoin L2 EVM with average block times of ~5 seconds and gas fees of $0.01 per transaction. As noted above, Botanix’ form of “wrapped” Bitcoin will be the most decentralized form of Bitcoin in the L2 EVM ecosystem - with decentralized sequencers available on Day 1. As such, Aave’s counterparty risk with BTC derivatives will be significantly reduced and offer greater asset diversification, especially as the Spiderchain enjoys widespread acceptance within the technical community.

The Botanix Labs team preempted the Bitcoin Season II narrative and has been building for almost two years. As such, they have already built out the major DeFi primitives required for an end-to-end DeFi experience with ~20 native ecosystem teams and another ~40 dApps (including Tier 1 DeFi protocols such as Vertex, Frax, Kiln, etc.) deploying Day 1 of mainnet. The non-incentivized testnet v0 launched in November 2023 and garnered 1.5M transactions, 500K users/wallets connected, 30K contracts launched community. Botanix Labs also has ~60K highly engaged community members, making it the largest organic community in Bitcoin. Despite not having a chain-level points program, the team has secured significant Day 1 liquidity commitments.

By deploying Aave V3 on the Spiderchain, they aim to enhance liquidity options and provide users with more opportunities within the Aave ecosystem.

Reasons for Integration:

  1. Early Mover Advantage within Bitcoin DeFi as a Launch Partner
    • With a deployment on the Spiderchain, and considering Aave’s brand as the incumbent leader in DeFi, Aave has the potential to capture significant early mover advantage on the only Bitcoin chain with a high-quality DeFi ecosystem as the flagship lending protocol. As the most decentralized Bitcoin-aligned chain, Botanix Labs has also secured net new TVL commitments from BTC whales who have previously never engaged with DeFi.
  2. Access and Penetration to Bitcoiner userbase
    • The Spiderchain plans to be the home of Bitcoin-native DeFi, whereby once a user onboards their Bitcoin to the Botanix EVM, they can have an end-to-end DeFi experience (DEX, stablecoins, lending/borrowing, derivatives, staking, etc.) and experience native bitcoin yield without necessarily bridging to other chains. As such, it attracts a new Bitcoiner profile that is excited about DeFi and the potential of earning yield. With an integration, Aave can attract this new set of on-chain users.
  3. Integration with GHO within the Spiderchain ecosystem
    • Botanix Labs will integrate and support the GHO stablecoin across the ecosystem, as one of the key USD stablecoins that will enable users to borrow against their BTC collateral.
    • The core product of the GHO stablecoin, backed by BTC, is one of the most anticipated use cases for Bitcoiners and the Botanix team expects rapid adoption of this primitive. Assuming a linear increase in GHO borrowing caps, the team expects a high capture rate of new borrows with Aave DAO being the primary beneficiary in this interest income upside.
  4. Innovation within Bitcoin Scaling
    • The Spiderchain is well accepted as a meaningful technical innovation within the Bitcoin community, with its innovation of decentralized multisigs supported by PoS being recognized as one of the few L2 scaling designs that is possible today on Bitcoin core without any soft forks needed.
  5. Most Performant Bitcoin L2
    • The Spiderchain offers high throughput and low latency, with 5 second block times, which can support Aave’s transaction demands and maintain user experience.
    • Lower transaction fees on the Spiderchain can reduce operational costs for Aave users and make DeFi activities more affordable.
  6. Strategic Partnership with Chainlink
    • Chainlink Labs is a strategic partner of Botanix Labs, as a key infrastructure and market partner. Botanix Labs will integrate with ChainLink’s Price Feeds as the oracle provider for the market, and with the recently announced Cross-Chain Interoperability Protocol (CCIP) to enhance the functionality and security of Aave on the Spiderchain.
  7. Liquidity Provision
    • As Botanix Labs is deeply embedded in the Bitcoin ecosystem, they have been able to secure significant liquidity commitments and can bootstrap initial liquidity for Aave to run smoothly upon deployment. Exact LP details can be determined in the next phase of the deployment process, but we can conservatively expect at least $20M in BTC commitments to Aave upon mainnet launch.

Technical Feasibility:

  1. Seamless Integration and Compatibility with v4:
    • The Spiderchain is EVM-equivalent, running the rust implementation of the EVM (reth), ensuring an easy integration with Aave V3’s existing codebase.
  2. Chainlink Integration:
    • ChainLink’s Price Feeds will be available Day 1 of mainnet, along with CCIP as the canonical bridging partner.
  3. The Graph Integration:
    • Botanix Labs will have The Graph’s subgraph functionality enabled Day 1 of mainnet, ensuring an easy migration for Aave.
  4. Development and Testing:
    • Botanix Labs will coordinate with Aave’s technical team including BGD to ensure a seamless deployment, including comprehensive testing on Botanix’s testnet.
  5. Security Audits:
    • Botanix Labs will work with Aave’s security team to perform thorough audits and ensure that the deployment meets all security standards.

Deployment Plan:

  1. Phase 1: Initial Discussion
    • Gather community feedback through this TEMP CHECK.
  2. Phase 2: Detailed Proposal
    • If the TEMP CHECK indicates positive support, submit a detailed ARFC (Aave Request for Comment) outlining the technical, economic, and security aspects of the integration.
  3. Phase 3: Implementation and Monitoring
    • Upon eventual approval, deploy Aave V3 on the Spiderchain and monitor the integration closely to address any issues and ensure stability.

Risks and Mitigations:

  1. Technical Challenges:
    • Botanix Labs will work closely with Aave’s developers and service providers (such as BGD and ACI) to address any technical challenges during integration.
  2. Security Risks:
    • A comprehensive security audit will be conducted to identify and mitigate potential vulnerabilities. This would be in addition to the proposal’s review by Aave’s risk managers, Chaos Labs and LlamaRisk.
  3. Community Adoption:
    • They will engage with the Aave community throughout the process to ensure alignment and support.

Call to Action:

We invite the Aave community to express their support or concerns regarding this TEMP CHECK. Your feedback is crucial in determining whether to proceed with a detailed ARFC for the Aave V3 deployment on the Spiderchain, and will help us ensure that the integration aligns with Aave’s goals and community interests.

Links and References:

Disclaimer

This proposal is powered by Skywards. The Aave Chan Initiative is not directly affiliated with Botanix Labs and did not receive compensation for creation this proposal.

Next Steps

  1. Publication of TEMP CHECK, collect community & service providers feedback before escalating proposal to TEMP CHECK snapshot stage.
  2. If the TEMP CHECK snapshot outcome is YAE, publish an ARFC to continue gathering community and Service Providers feedback.
  3. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.

Copyright

Copyright and related rights waived under CC0.

5 Likes
2

At the current stage I’m 100% supportive. I think with a BTC L2 we will be able to get more and especially new user to the existing user base.
EVM user are natively switching between chains while Bitcoiner never really had this kind of opportunity. I could see this being a chance to capture market share in a potential new market and also a growth opportunity for GHO.
As Bitcoiner live fit decentralization, which stablecoin could fit better than GHO?

Also I like that there is no intention of running a points system, as this has caused more problems for any project than it helped in my opinion. Projects that used points had a big and steep rise in TVL only then to fall like a stone after the program ended or the token had its TGE.

3

Very much in favour of this proposal! Some reasons why:

  • Onboarding more ‘pure’ (i.e., decentralized) forms of BTC into the Aave ecosystem is necessary,
  • Botanix has onboarded Tier 1 DeFi protocols already;
  • Bringing more BTC holders to Aave will even further broaden the reach of the protocol by bringing in a differentiated user base;
  • Integrating GHO is at the core of the proposal and amplifies the core KPI the Aave ecosystem should be targeting: higher GHO borrow volume;
  • $20M in BTC commitments to Aave upon mainnet launch;
  • Availability of Chainlink feeds on Day 1, which is even more crucial in this case.

The above points are more than enough reason to take this proposal through to the ARFC stage and have it assessed by Aave’s risk providers.

1 Like