[TEMP CHECK] Allocating part of GHO Revenue to Safety Incentives

Hi @MarcZeller,

As this proposal is directionally aligned with an earlier forum post, link below, we are directionally supportive of this proposal.

We are not sure if everyone has seen the SM upgrade posts, there are many. The SM proposals also suggest replacing a portion of the AAVE with GHO for single stake assets and then using GHO to attract veBAL and vlAURA vote support to boost the SM yield and reduce Aave DAO’s overall budget spend.

Our main consideration with distributing GHO via the SM, is the timing. There needs to be solid liquidity for GHO and ideally some utility beyond swapping for fiat on a CEX or to another stable coin on a DEX to then cash out via a CEX. It would be prudent to let the GHO peg settle, develop a track record and then be integrated into the SM emissions. It may be that the Aave Governance process duration is already sufficiently long in duration to enable this proposal to progress without delay.

We like how the GHO is funded from revenue, not debt. The splitter concept lends itself to scaling the SM insurance fund nicely. However, in time when BPTs are accepted in the SM and smBPTs gauges are in production, direct emissions are less capital efficient compared to alternative mechanisms. Distributing GHO to attract veBAL and vlAURA vote incentives, will lead to a higher ROI on SM deposits and it will be another way to distribute GHO into the broader ecosystem. For stkAAVE and other single asset deposits in the SM, there would be no change except perhaps considering the overall desired APR to prevent overpaying.

The summarise, we are directly supportive and highlight that there are additional iterations which would further enhance the capital efficiency of the SM that should be considered. Pivoting to the more efficient approach for attracting BPTs into the SM is something that can be actioned in time and would likely lag this proposal in terms of implementation schedule.

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