[TEMP CHECK] Service Provider Proposal


This Temp Check proposes a one-year technical contributor engagement for the Aave Labs to act as a service provider for development of Aave V4 and a new visual identity.


Aave Labs seeks to be onboarded as a service provider to be one of the technical contributors to the Aave DAO. The specification below outlines the scope of the technical contributions of Aave Labs.


The following are the key deliverables within the grant:

Aave Protocol V4

Key deliverables for the 1 year scope of development include:

  • New Modular Architecture
    • An innovative design to enhance flexibility and efficiency, minimizing disruption for integrators.
  • Unified Liquidity Layer
    • A flexible liquidity management approach that allows for module modifications without needing to migrate liquidity.
  • Fuzzy-controlled Interest Rates
    • Automated rate adjustments based on market conditions, optimizing for both suppliers and borrowers. Utilizing Chainlink for precise data feeds, setting new standards in capital efficiency.
  • Liquidity Premiums
    • Adjusted borrowing costs based on collateral risk, ensuring fairer pricing. Higher risks incur higher premiums, while lower risks reduce costs.
  • Dynamic Risk Configuration
    • Allows dynamic adjustments to risk parameters based on market conditions without governance overhead.
  • Smart Accounts and Vaults
    • Simplifies user interactions with the protocol by allowing multiple smart accounts per wallet and enabling borrowing without direct collateral supply.
  • Automated Assets Offboarding
    • Streamlines the process of offboarding assets, reducing governance workload and ensuring predictable offboarding plans.
  • Enhanced Liquidation Engine
    • Introduces a variable liquidation factor, liquidation strategies, and batch liquidations to improve efficiency and borrower experience.
  • Automated Treasury Management
    • Implements a reverse auction mechanism for reserve factor assets, reducing governance overhead.
  • GHO Features
    • Native GHO Minting
      • Allows for more efficient minting of GHO directly from the liquidity layer.
    • GHO “Soft” Liquidations
      • Utilizes a LLAMM model to ease liquidations and manage market downturns, providing options for users to choose which collateral to liquidate to GHO.
    • Stablecoin Interest Paid in GHO
      • Suppliers can opt to receive interest payments in GHO, enhancing capital efficiency and providing additional benefits to the protocol.
    • Emergency Redemption Mechanism
      • A feature to handle prolonged and heavy depegging of GHO, ensuring stability and reliability.

Visual Identity Assets

Aave Visual Identity Guidelines | 2024

Deliverables include:

  • Provision of Visual Identity Assets: Compiling and delivering a package of visual identity assets, including, but are not limited to, logos, color schemes, typography guidelines, various Ronnie illustrations and other graphical elements.
  • Usage Guidelines: Instructions on how to implement the visual identity assets across various platforms and media, including digital and print formats. Practical examples and best practice scenarios demonstrating the potential usage of the visual identity assets.
  • Delivery: The assets will be delivered and packaged in a Github repository accessible to everyone and hosted within the Aave DAO Origin organization.

Prospective Second and Third Year Scope

The DAO may renew the engagement with Aave Labs as a service provider for a technical contributor for a second and third year with that scope of work to be determined at a later date and subject to community input and AFRC approval.


$12m GHO, including $3m upfront and $9m streamed over the year.

Evaluation Metrics

  • Monthly reporting of contributions to the Aave DAO.
  • Solicitation of feedback from other service providers working as technical contributors and DAO members.
  • Direct and transparent engagement with the DAO via the governance forum.


  • Aave Labs shall strictly adhere to the scope of its designated role as one of the service providers working as a technical contributor, ensuring all decisions and actions remain within our areas of the engagement.
  • Aave Labs shall prioritize the security and robustness of its technical contributions.
  • Any production-ready code written within the scope of the proposal will be moved to the Aave DAO’s GitHub repository.
  • Any written software will be deployed by another Aave DAO service provider specializing in deployments, subject to the Aave DAO’s decision and approval.
  • Aave Labs shall engage with the DAO like all other contributors within the established working relationships and procedures of the Aave DAO. For example, decisions concerning risk configurations, DAO treasury, code audits, and other matters not covered by this proposal will need to be separately approved by the Aave DAO via TEMP CHECKs and Snapshots.


Next Steps

  • Engage with the community and other service providers to refine the proposal
  • Incorporate feedback and escalate Temp Check to a Snapshot vote
  • Following the Snapshot vote, escalate to ARFC stage


The text of this TEMP CHECK is released under the CC0 license. The visuals and the New Visual identity are subject to and governed by the license specified in the approved governance proposal by the Aave DAO (to be included in the ARFC at a later date).


Hi Aave Labs,

The plans all seem amazing. Like others though I am concerned about the cost of building V4, for the DAO.

In response to community feedback, you have already reduced the requested budget once, which is appreciated. The fundamental problem now however, is that you have given no budget for years 2 and 3.

This is a problem for the DAO. Because let’s just cast our minds forward to near the end of year 1 of building v4. At that point in time, v4 is then well underway, meaning you can essentially come to the DAO and ask for ANY amount as payment for year 2… Because what are we going to be able to say at that time if you quote an extremely high price for year 2? Say no and leave v4 half finished? Of course not. We would be obliged to pay you any amount that you demand, at that time.

So by not providing a budget for years 2 and 3, that gives you leverage over the DAO later when we are near the end of year 1, to charge any amount you want for year 2 (same applies to year 3 after that). You could, if you wished, essentially take the DAO to the cleaners and we would be forced to either pay those demands, or leave v4 unfinished. Neither of those eventualities would be good for the DAO.

With respect, my request is for you to outline a budget for years 2 and 3. This is difficult to do of course, because unforeseen costs can arise during development. That’s the nature OF development. But if you could at least provide us with an approximate budget for years 2 and 3, this will be good for the DAO, because it will give us an approximate number that we can refer back to later on, in the event that you (possibly) later try to demand a significantly higher number than the estimate I am asking for, when the time comes near the end of year 1 (for year 2 cost) and near the end of year 2 (for year 3 cost).

So I am asking you about cost for years 2 and 3 now, ahead of time, to protect the DAO from that potential situation later on.

Lastly I just want to say thanks for all your contributions to bringing us as far as we are right now. Members of your team have been fundamental to getting us this far, and for that I am grateful.


@topcat The additional cost risks you mentioned are not a concern for V4. This proposal fully covers the V4 costs for the proposed scope on our part, excluding audits. Audits will be subject to community governance proposals and approvals at the auditing stage.

@AaveLabs thanks. So just to make sure I understand. Excluding audits, total cost of V4 to the DAO for the 3 years will be 12m GHO (i.e. 4m GHO per year on average)?

And that would mean no further payments are proposed to be made to Aave Labs from the DAO, for years 2 and 3?

The ACI fully supports the Avara proposal in its current form.



@topcat as per the proposal above, V4 will be developed within the one-year timeframe specified. No other payments are being proposed to the Aave DAO for the scope.

The Service Provider Proposal Temp Check is now live on Snapshot and ready to be voted on here.


Given our previous thoughts on v4, and the clear deliverables and timeframe outlined in this proposal, combined with the relatively reasonable cost of $12M GHO over 1 year to develop v4, approving this proposal is a no-brainer. From a cost-benefit perspective, this proposal seems entirely positive. Moreover, to alleviate any concerns about ‘other service providers being able to do this for a lower cost’, Aave Labs has institutional experience and history with Aave and is best placed to join the ranks as a service provider and develop v4 under the scope outlined. This proposal also addresses the feedback post v3’s development where there was a retroactive payment made - asking for the funds at the start is the best move to make and aligns Aave Labs with other Aave service provider models.


We supportive of this proposal for the following two reasons:

  • Aave V4 is a necessary product for Aave DAO to continue leading the Lending Protocol beyond 2024, and it is worth investing in.
  • Thanks to the feedback from the community posted on Aave 2030 and the flexible and sincere response from Aave Labs, the proposal sope has become clearer, and it is improved a significant reduction from the initial budget proposal.

Thanks @AaveLabs , looking fwd to the advancements - less gho

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