Thanks for the feedback @lbsblockchain on those points
• It would be good to clearly differentiate the scope of what Messari is proposing with Llama’s scope.
Llama has provided great work to date, and we feel our proposal is complementary. Our deliverable is different in that their quarterly reports are more of a chartbook format while ours takes the form of a research report with a bit more context. This enables us to redistribute them on the institutional research platforms mentioned. In addition, we’re proposing entirely new analytics and deliverables (see governance reports and service provider transparency).
On the strategic finance side, Llama has built a runway analysis looking at existing treasury, incoming revenue, and outgoing costs. We plan to build a full financial model to enable forecasting with variable assumptions. This forward-looking tool allows the DAO to make even more informed strategic decisions such as future capital expenditures or revenue generating opportunities.
• What is the ROI for Aave on the $350k investment? What are the financial benefits of engaging Messari at this point? What are the alternatives to the deployment of $350k?
The tangible ROI comes from the increased exposure and credibility to a large institutional audience that can then provide additional borrowing, lending, and investment as a result of insights gleaned from reading these reports. Anecdotally we know that decision makers at tradfi funds have used these as key parts in their diligence process to participate in crypto’s credit markets.
In terms of alternatives, I’m not aware of other routes to gain access to these institutional platforms. But if the DAO wanted to execute on these deliverables, it would require a few full-time hires which would very likely cost more than the proposed cost.
• How exactly would this proposal help expand Aave to an institutional audience and what are the tangible steps proposed for this? The problem with banks and other institutions engaging with protocols like Aave are more to do with regulatory concerns (unable to hold digital assets in custody, for example), lack of infrastructure and know-how to engage, and difficulty to integrate with legacy infrastructure. How would improving financial reporting at this stage help Aave work more closely with institutions and enable them to act on this information? Is this a proposal that may be more beneficial when the market is more mature?
Institutions are some of the more risk averse investors and they’re also in the earlier stages in their crypto journey. This means they won’t be scouring the web for scattered dune dashboards and information hidden on governance forums. Instead, they need professionalized reports they can access in trusted platforms the same way they do for traditional investments to provide a basis for their due diligence. From our conversations with this audience the infrastructure component is being figured out. It’s more so the information overload and not knowing where to start or what protocols to trust that’s holding them back.
• Some aspects of the proposal are interesting and would be very useful, e.g., the Service Provider Transparency and Governance Reports.
Thanks we agree!
• Aave is a flagship DeFi protocol and has good engagement in the DAO. Therefore, the number of views and quality of readership may not be the most fit for purpose success metrics but this should be validated with the rest of the DAO. There may be a need for more tangible metrics that bring financial benefits to Aave via increased institutional engagement.
Given the nature of this type of engagement it’s extremely difficult to say $x came from xyz investor that decided to borrow/lend after reading the report on the Bloomberg terminal. We can be as transparent as possible though so thinking probabilistically it doesn’t become a huge leap to deduce a tangible ROI.
• The $350k may be a bit too expensive and we may need to cut the scope down. This should be validated with the rest of the DAO.
On price, we feel this is in line with or below the industry’s average for highly involved service provider engagements. We’re able to provide unique value-add to the DAO with a clear path towards paying for itself as well as guiding better strategic decision making.