[TEMP CHECK] Deploy a Dedicated Aave V4 Whitelabel Instance fully managed by EtherFi on OP Mainnet to Power Ether.fi Cash

Governance General
1

Author: Ether.Fi

Date: July 1, 2026

Summary

EtherFi requests that a dedicated, EtherFi operated Aave V4 hub on OP Mainnet is deployed to serve as the credit backend for EtherFi Cash, our Visa card product used by tens of thousands of cardholders. This instance would replace the bespoke borrow/lend market (“Debt Manager”) that powers Cash today.

The instance is isolated and whitelisted: EtherFi operates it end to end - configuration, risk parameters, liquidity, and growth, while Aave provides the V4 deployment and operating license and earns a share of the revenue it generates. Because the instance is ring-fenced and EtherFi run, Aave carries the upside without taking on the market’s day-to-day risk.

The proposal arrives with a substantial commercial package contributed by EtherFi and the Optimism Foundation, summarized in the Commercial Terms section, including a 20% revenue share to the Aave DAO, GHO integration into EtherFi Cash, an Aave-deployed GHO GSM on OP Mainnet, full migration of the EtherFi Debt Manager, up to $175M in assets at launch, and product exclusivity to Aave V4.

Motivation

EtherFi Cash today. Cash lets cardholders spend against yield-bearing collateral at the point of sale: they borrow a stablecoin to settle a Visa transaction while preserving their underlying asset exposure. It runs in production on OP Mainnet on a custom, non-pooled borrow/lend market with roughly $25M in active borrows across 16+ collateral assets and a high-frequency, low-ticket, well-distributed borrow profile. We are targeting roughly $500M in assets on the instance by the end of 2026.

Why migrate to Aave V4. Maintaining a bespoke lending engine is increasingly operationally taxing. Migrating to a dedicated Aave V4 instance lets EtherFi inherit audited, battle-tested infrastructure and governance machinery while preserving the Cash product surface (User Safes, Credit/Debit modes, settlement) above it.

Why this is a fit for Aave.

  • Pure-upside revenue. Aave shares in the borrow revenue of a live consumer product without committing pool liquidity or balance sheet to it. At our end-2026 target scale, the instance is projected to generate an estimated $5-6M in annual revenue, 20% of which accrues directly to the Aave DAO and compounds as the Cash book grows.

  • Direct GHO adoption. GHO becomes a supply/borrow reserve on the instance as soon as GHO is deployed on Optimism, with an Aave-deployed GSM strengthening GHO’s peg and liquidity on OP Mainnet.

  • GHO as a spend currency. Beyond being a listed reserve, GHO could, at the Aave DAO discretion, be enabled as a deposit/spend asset in Cash, subject to sufficient GHO liquidity to support the Cash program as expected, turning card volume into organic GHO demand.

  • Real-world spend footprint. Aave extends into consumer card settlement, anchored by a product with tens of thousands of active cardholders.

  • Net new on-chain activity on OP Mainnet, with exclusivity to Aave V4 for the Cash product.

Aave Labs has expressed support for deploying the instance and providing the operating license. This Temp Check initiates the governance process to ratify that direction and to confirm community sentiment ahead of an ARFC.

Specification

This Temp Check is intentionally high-level; detailed parameters and the technical specification will be finalized at the ARFC stage with service-provider input.

Architecture. A dedicated Aave V4 hub on OP Mainnet. One of V4’s first Layer 2 targets, with spokes depending on the final lending architecture. The instance is whitelisted and isolated from Aave’s shared liquidity and other markets. EtherFi operates the instance end to end and is responsible for collateral listing, risk parameters, oracles, and ongoing risk management. Aave provides the V4 codebase under license for 2 years initial term, but is not responsible for its assets, configuration, or risk.

Operating model. EtherFi acts as operator and will authorize an independent risk admin for the instance, with authority over:

  • Collateral listing and de-listing

  • Oracle selection (Chainlink, RedStone, or otherwise) and configuration

  • LTV, liquidation threshold, and liquidation bonus per asset

  • Interest rate models, supporting both utilization-curve and fixed-rate reserves

  • Supply and borrow caps, and pause states

EtherFi and the independent risk admin will handle, as appropriate, items such as configuration, liquidity sourcing, and market growth in full.

Aave’s role. Aave Labs supports EtherFi in the deployment of the V4 instance on OP Mainnet and provides the license to run the whitelisted version, and deploys a GHO GSM on OP Mainnet to support GHO stability and peg.

Collateral at launch. Mirror the existing Cash collateral set, with streamlined additions over time via the admin role:

  • ETH-likes: weETH, wETH

  • BTC-likes: eBTC

  • Stables: USDC, USDT, EURC, frxUSD, GHO

  • EtherFi platform, Optimism & HYPE: ETHFI / sETHFI, eUSD, OP, beHYPE, wHYPE

  • Liquid vault receipts: LiquidETH, LiquidBTC, LiquidUSD, LiquidReserve

Borrow reserves. USDC and GHO, added as both a supply and a borrowable asset.

Liquidations. Aave V4’s standard partial liquidation behavior; EtherFi adapts its liquidator tooling to the V4 flow.

Commercial Terms

The following package has been aligned in principle between EtherFi, the Optimism Foundation, and Aave Labs to strengthen the instance at launch. Final mechanics are subject to this governance process and service-provider review.

  • Revenue share to Aave DAO: 80–20 EtherFi / Aave on instance reserve-factor revenue. 20% to the Aave treasury, settled automatically. This split reflects the long-standing, proven relationship between EtherFi and Aave, together with Aave V4 serving as the sole lending and borrowing market for EtherFi Cash.

  • GHO integration: GHO supported on the instance as both a supply and a borrowable reserve once GHO is deployed on OP Mainnet. Aave deploys a GHO GSM on Optimism.

  • GHO as a spend currency: at the Aave DAO’s discretion and conditional on sufficient GHO liquidity for the Cash program, GHO may also be added as a spendable/deposit asset within Cash itself, converting a portion of card usage into direct GHO demand.

  • Assets at launch: EtherFi brings up to $175M in assets to the instance at launch, with a clear path to grow significantly from there.

  • Exclusivity: EtherFi Cash will exclusively use Aave V4 lending markets as DeFi Lending Protocol.

  • Launch capitalization (EtherFi & Optimism Foundation funded):

    • $20M supplied from the Optimism Foundation Treasury into the instance.

    • $1.2M joint incentive package, directed toward deposits and/or borrows across any asset.

    • $5M strategic GHO position, taken via the GHO GSM, shared by the Optimism Foundation and EtherFi, held for 6 months, after which continuation is at each party’s discretion.

Taken together, Aave contributes the deployment, license, and GHO infrastructure; EtherFi and the Optimism Foundation contribute the launch capital, incentives, asset base and ongoing operation, with revenue flowing back to the Aave DAO.

Disclaimer

This proposal is submitted by EtherFi as the operator of EtherFi Cash and the proposer of the instance. The commercial terms reflect agreements in principle with Aave Labs and Optimism Foundation; all terms and parameters are subject to this governance process, ARFC refinement, and service-provider review. EtherFi is not compensated by any third party for submitting this proposal.

Next Steps

  1. Gather community feedback for a minimum of 5 days.

  2. Escalate to a TEMP CHECK Snapshot vote.

  3. On a successful Snapshot, proceed to an ARFC with finalized parameters and risk/finance service-provider input, targeting a July 2026 deployment to meet the Cash product handoff from the current Debt Manager.

Copyright

Copyright and related rights waived via CC0.

15 Likes
[ARFC] Deploy a Dedicated Aave V4 Whitelabel Instance fully managed by EtherFi on OP Mainnet to Power Ether.fi Cash
2

unsure of the specifics around deal terms but fully support aave tech powering the etherfi stack. welcome to aave governance, etherfi!

5 Likes
3

“Reading this proposal, the key question isn’t who deploys infra, what the revenue split is, or how many assets might come at launch. The real unresolved issue is: when economic value is captured by an off‑chain branded product, but legal and governance risk can seep back to on‑chain tokenholders, who actually owns Aave?

Today, the 80/20 revenue split, exclusivity, and ‘no balance sheet risk’ framing can look comforting. But in any future consumer‑protection or regulatory event, how exactly will courts, media, and regulators see Aave here as a neutral infra provider, or as a commercial partner in a credit product marketed to tens of thousands of cardholders?

Aave’s recent governance history already surfaced deep fault lines around brand, interface, and value capture. This deal risks compounding those tensions without clearly answering three basics:
finance.

Who bears explicit legal and regulatory downside EtherFi’s legal entity, Aave DAO, or both?
etherfi.

Under which clearly defined conditions can tokenholders renegotiate or exit this partnership, and what binding obligations does the off‑chain party have in that scenario?

If GHO’s peg, treasury, or risk profile is stressed by this isolated instance, how do the commercial terms flex back in favor of the protocol or is optionality one‑way?
governance.

Until we see crisp, public answers and enforceable mechanisms on these three points, calling this arrangement ‘pure upside with no risk’ feels more like marketing than risk governance.

If Web3 is serious about being a new financial architecture, we need to stop pretending that protocol brands and governance tokenholders are partners only when upside is shared, but magically become ‘just infra’ when downside shows up. That’s not decentralization; that’s selective responsibility.”

2 Likes
4

agree with these points

2 Likes
5

Building on MconnectDAO’s questions around legal responsibility and exit mechanisms, I think the economic case also needs more precision before the ARFC stage.

The proposal estimates $5–6M in annual instance revenue and allocates 20% of reserve-factor revenue to the Aave DAO. If these figures refer to the same revenue base, this would imply approximately $1–1.2M annually for the DAO at the targeted scale. Could the proposer provide the assumptions behind this estimate, including average borrows, utilization, interest rates, reserve factors and the expected growth timeline?

It would also be useful to clarify which deployment, audit, GHO GSM, monitoring and ongoing service-provider costs will be borne by EtherFi, Aave Labs or the DAO. Governance should assess the net contribution to the DAO rather than the gross revenue share alone.

There is also a framework question. The canonical framework defines a whitelabel instance as one using existing Aave liquidity, while this deployment is isolated and funded and operated by EtherFi. The framework also contemplated token consideration for both friendly forks and whitelabel instances. Which category is being applied here, and why is there no ETHFI consideration or explicit justification for deviating from the baseline?

I am directionally supportive of progressing to ARFC, but the commercial case should not be considered finalized until these economic questions and the legal and risk questions raised above are addressed.

Revenue to the DAO is valuable, but it should not be conflated with direct value accrual to AAVE holders.

2 Likes
6

The TEMP to deploy a Dedicated Aave V4 Whitelabel instance has been raised to snapshot. Voting will begin in less than 24 hours. You may vote here

7

I support the overall direction of this proposal. Leveraging Aave V4 as the lending infrastructure behind EtherFi Cash creates an opportunity to extend Aave into consumer payment use cases while generating sustainable revenue for the DAO and increasing potential demand for GHO.

I particularly appreciate the proposed isolation of the instance from Aave’s shared liquidity, allowing EtherFi to manage day-to-day operations and market risk while the DAO benefits from licensing, protocol adoption, and revenue sharing. This separation of responsibilities helps preserve the integrity of the core Aave markets.

As the proposal progresses to the ARFC stage, I believe it will be important to carefully review the governance framework, operational responsibilities, risk oversight, and long-term alignment of incentives between EtherFi and the Aave DAO. Ensuring transparency and clearly defined accountability will be essential for the success of this partnership.