[TEMP CHECK] TokenLogic Proposal

Governance
1

title: [TEMP CHECK] TokenLogic Proposal
author: @TokenLogic
created: 2023-08-25

Summary

This publication present the Aave Community the opportunity to onboard TokenLogic as a service provider. TokenLogic shall focus on Aave DAO finances and support GHO adoption.

Introduction

Members of the TokenLogic team have been contributing to Aave Protocol since mid 2020. More recently, the team has been expanding in preparation to better support our three focus areas:

  • Treasury Management
  • Safety Module modelling
  • GHO Adoption

TokenLogic is a developer focused team with a proven track recorded dating back to March 2023 when the delegation platform was annouced. During this time we have delivered the following:

The team is growing and we onboarded an accounting team to start developing a Aave Financial Reporting (genesis to date) frontend, launch date mid/late Q4 2023.

Current & Future Areas of Focus

The below provides a high level overview of our key focus areas:

  • Treasury Management

    • Improving the risk adjusted return of DAO’s assets
      • Aave v2 to v3 migrations
      • Swap long tail assets to ETH / stable coins
    • Improving capital efficiency
      • Convert wMATIC to MaticX & stMATIC
    • Managing strategic assets
      • Upgrades to Strategic Asset Manager v1 functionality as required
    • Modelling asset purchase / bribe
      • Participate in Quest/Bribe v acquiring asset
    • Engage, collaborate and support community lead initiatives
      • Example: How best to optimise CRV holding
    • Oversee Protocol Owned Liquidity (POL) deployment
      • If DAO elects to provide POL, ensure Boost is directed to holding to optimise returns and maintain the strategy through claiming and swapping/locking rewards.
    • Design and create a contract for managing DAO’s POL
      • Perform swaps, claim incentives, transfer assets etc…
    • Claim Aave Protocol revenue fees at the end of each month
      • This bot is currently operated by Llama

  • GHO Liquidity / Incentives Management

    • Create Liquidity Management Committee / Budget
      • Provide modelling to support Committee decision making
    • Liquidity Incentive Optimisation Analysis (Strategic Assets)
      • Target pool sizes & APRs
    • Explore synergies with Safety Module diversification
      • Potential to include GHO liquidity pools
      • We will lead this effort after Llama’s contract finishes

  • Financial Reporting

    • Runway forecast
      • Specifically tracking asset balance and drawdown rates to show when other assets require being swapped to fund the DAO
    • Budget and resource allocation
      • Work with ACI and others to develop a DAO budget
    • Transparent accurate, third party reviewed, accessible financial statments
      • Launch a financial statment frontend mid/late Q4 2023
      • Cover Ethereum, Polygon (PoS), Arbitrum, Optimism and Avalanche initially and expand over time.
      • Quarterly financial publications
    • Revenue per Reserve v time charts
      • Daily or Hourly data showing revenue being generated per Reserve on each Aave v2 and v3 iteration
      • Users will be able to select an asset and see total revenue noiminated in the underlying or select an instance of Aave and a specific asset.
      • Data will be displayed graphically with some ability to interact with the charts

  • Supporting GHO Adoption

    • Collaborate with other teams to support GHO adoption
      • Promote utility and velocity
    • Continual development of GHO Analytics frontend
    • Promote adoption through DeFi integrations
      • Examples include working with teams to build real yield strategies, structured products and list GHO as collateral

  • Safety Module Improvements

    • Model the SM performance during shortfall events
      • Create a frontend that show historical performance for swapping certain amounts of each asset instantly (not dutch auction) via an aggregator
    • Model / forecast emission budget
      • AAVE emissions are finite, GHO is better
      • Capital efficiency could be improved through adoption of quests and/or acquiring assets that control the emission schedule of another protocol
    • Advocate for diversification and reducing the reward budget
      • Introduction of stable coins, ETH and other assets to reduce reliance on AAVE during shortfall events
    • Collaborate with others to refine to enhance the SM’s effectiveness at providing a backstop for Aave Protocol
      • BGD to implement on-chain upgrades
      • Model liquidity pool assets to be added to SM
      • Work with ACI, BGD, Llama and others to determine a target coverage, implementation of proposals and refine the asset blend

Each of the areas detailed above is interwoven and has a material affect on the DAO’s financial status. TokenLogic is committed to working with other DAO contributors collaboratively and constructively to better the Aave Protocol.

To support the initiatives aboves, we have created an analytics platform. The GHO dashboard is our first analytics initiative. Beyond GHO, we plan on using the analytics platform to provide the DAO with near live revenue data stream for each asset reserve on supported networks. We seek to always incorporate community feedback and build out any requests from the community.

Our team is very well connected across defi and we intend to support Aave and GHO where ever we can. To this end, we are already working with several teams looking to integrate GHO and have been working with @0xbilll at AGD with targeted spending initiatives.

To ensure continuation of active work scopes, TokenLogic will continue to manage the migration of users on Polygon v2 to v3. This includes either fortnightly or monthly parameter adjustments. We encourage another service provider to pick up the Avalanche v2 migration. However, if required, we are happy to support provided it doesn’t impact our key focus ares which we will be measure against.

Prior Work

This section, we will focus on what TokenLogic has delivered to Aave DAO:

There are also several gauge proposals presented on the Balancer governance forum and even BPT asset listing proposals on Sturdy Finance that support GHO’s launch and depositing funds into Aave v3 respectively.

Delivering the above work has enabled TokenLogic to grow the team beyond @MatthewGraham and @DeFiJesus, to include @Dydymoon, @scottincrypto, @agentmak and TBA (soon). With several developers, strategists and accountants apart the team, we are mostly manned up and ready to take on a more involved service provider scope.

Budget

We are requesting a total budget of 350,000 USD for an initial 6 month period to support our initiatives.

This budget will contribute to covering operational expenses, including tools, subscriptions, and infrastructure plus the resources required to deliver our work.

The payment terms are as shown below:

Upfront Transfer: 210,000 0 GHO
Stream: 140,000 350,000 GHO

This is a 60/40 0/100 split of upfront/streamed.

Address: eth:0x3e4A9f478C0c13A15137Fc81e9d8269F127b4B40

Similar to ACI, TokenLogic is to be included in the Gas Rebate program that reimburses on-chain voting, calling revenue contracts and deployment costs.

TokenLogic commits to not receiving any funds from other entities for creating proposals and publishing AIPs on Aave Protocol.

Defining Success

The below provides an overview of how the DAO can assess TokenLogic’s performance:

  • Migrate Aave DAO funds from v2 to v3
  • Create Liquidity Committee with funding
  • Optimise GHO liquidity incentives
  • Strategic Assets are being actively used
  • Runway funding sustained (>6 months of the correct assets)
  • Convert Treasury assets to LSTs
  • Launch financial statement frontend
  • Continual flow of new GHO Dashboard features

As DAOs are dynamic, when more urgent priorities emerge TokenLogic will support and proactively work with other service providers to act in Aave’s best interest.

Next Steps

If the [TEMP CHECK] is successful and the community supports our proposal, we will move forward with a formal [ARFC] submission to governance.

We are committed to maintaining transparency throughout the process and providing regular updates the community on our progress.

We thank everyone for considering our proposal and appreciate your support. We look forward to working together and driving success to the Aave Protocol.

Copyright

Copyright and related rights waived via CC0.

14 Likes
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The ACI would like to acknowledge the contributions and efforts of TokenLogic in the Aave DAO. Having collaborated with TokenLogic on multiple occasions, we have experienced firsthand the professionalism and dedication they bring to the table.

While our two entities, ACI and TokenLogic, have had moments of alignment and divergence, it has always been rooted in a shared goal of advancing the Aave Protocol. Our interactions have ranged from agreements to disagreements, from debates to co-authoring proposals. Such dynamics are natural when two professional service providers work towards a common objective.

We deeply respect the expertise and insights TokenLogic offers, and we believe that diversity in perspectives and approaches is crucial for an efficient Aave DAO.

Given the track record of TokenLogic, their clear vision for the future, and their commitment to the Aave DAO, the ACI fully supports this proposal and looks forward to further collaborations and joint efforts in the future.

YAE
YAE2949Ă—2780 1.06 MB

8 Likes
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Strongly supportive of this proposal. Having worked with @TokenLogic Team and their contributors over the years, they have been great advocates for the Aave DAO. I hope the DAO formally onboards them as a service provider, and look forward to them continuing to be a great collaborators in the future!

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After working closely with @MatthewGraham and other members of the team in their previous roles with Llama and currently under @TokenLogic, I can attest to their professionalism and commitment to the success of Aave, and I believe they are well-positioned to deliver on the important items outlined in the scope of this engagement.

A key aspect of this engagement (and any other service provider engagement) will be how the community can evaluate its success. Although broad, the definition of success section in the proposal is important as a basis for community discussion and future reference. This should help in evaluating performance and the delivery on the scope of the engagement.

Looking forward to continued collaboration with the @TokenLogic team!

1 Like
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First off, supportive of TokenLogic becoming a paid service provider. My experience working with Matthew has proven to me that TokenLogic will execute, put in a lot of work, and pursue ideas that they believe are good for Aave vigorously.

That being said - I think 350K for 6 months is excessive for a team of this size with a scope this broad.

Imo, TokenLogic should be extremely specific in scope. Identify an area that they are uniquely suitable for - and nail it. Charge less for 6 months, and then once you have proven you can nail a specific scope increase price and heighten goals.

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@TokenLogic has been a crucial contributor to the Aave DAO and is exactly the type of service provider that should be funded and retained to continue the forward motion and growth of the protocol. Their prior work related to growing revenues via liquidity, pools, and new assets has been instrumental.

With that said, this proposal is both expensive and broad-reaching in its scope, not too dissimilar from the original Llama proposal last year that was proposed to be canceled. If TokenLogic is the best service provider for this full array of activities, then the DAO should formalize and approve this proposal, but the community should do its homework on other potential providers to ensure it has all the information it needs to make that decision.

I have been working on a framework for this exact situation that I was planning to propose in short order, but finalized and published this evening in response to this conversation. This proposal outlines a new process for determining key problems facing the DAO and asks for potential service providers to bid on that work vs. the other way around. More information can be found here.

Before voting on this proposal, I believe we should be able to compare the offerings against other major industry players to ensure that Aave is getting the best service at the best price. Multiple other protocols have had similar conversations around both treasury management and financial reporting and Aave should take lessons from those vendor diligence conversations and apply them here.

Specifically, I would like to see proposals from more vendors on both of these topics, such as:

  • Financial reporting: Messari, Steakhouse, r3gen finance
  • Treasury management: Karpatkey, Avantgarde, Llama, Alastor, Mimic
    and more…

The community and the protocol will benefit from a competitive bidding process for this work and, if selected, TokenLogic will be validated as the best suited for this role.

12 Likes
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@TokenLogic has definitely proven their capabilities to contribute for the DAO and we’re supportive of them becoming a service provider.

A few remarks though:

  1. We’re fully aligned with @benhoneill here. We see that again, this is becoming quite a broad scope and the definition of success is good but not enough. More tangible results and granularity is needed on that part. For example, there is no mention of Safety Module work on the KPIs.
  2. We believe that on the Treasury management part there are other vendors that could provide their capabilities on a deeper level than TokenLogic.
  3. For the argument around budget - we do think it’s potentially excessive and can be reduced by considering to put the treasury management aspect into a bid for vendors. The vendors can charge a fee on AUM & tangible results (performance fee) rather than a "Service Provider stream of a broader scope. While @TokenLogic has been active on Treasury management, we feel like this is a “cherry on top” to try and justify the stream that is asked here. We encourage them to consider also an AUM based approach and compete with other vendors on this topic.

As one of the biggest DAO’s, there should be multiple proposals to evaluate opportunity and costs.

Additionally, would be great to know what are the costs associated for infrastructure and tooling. This would give a more transparent way to evaluate the budget needed.

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We believe an RFP process such as the Framework for Service Provider Engagements outlined above is a necessary step for DAOs to ensure they are getting both the maximum value from services rendered and the best possible price.

Having specialized in financial reporting for over 40 protocols, we’d like to offer our services as we feel we’re able to provide them at a lower cost through our economies of scale/data capabilities and with unique value add given our institutional partners (redistribution on the Bloomberg Terminal, S&P CapIQ, Refinitiv).

Additional details on our services can be found in our earlier Temp Check which can revise with a narrower scope and lower price based on the feedback we received.

5 Likes
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It’s becoming clear there is demand for an RFP process here. I support this especially for the case of DAO treasury management and reporting - there are absolutely a tonne of candidates for the DAO to consider.

If possible, I’d think it would be best to wait until the outcome of @benhoneill’s proposal before moving forward on this one!

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In general i support this proposal, but i see it like @Hazbobo. There is a need for a framework for service provider, but one which isn’t going to kill the current speed and dynamic the DAO has. We haven’t found it yet imho.

Also i want to add someting here. I would like to see a budget plan for the funds being asked for.
Like what are they being used for, how many people are TokenLogic, what will happen with remaining funds, will we see updates regarding the costs.

I would like to avoid a situation we recently had with Llama where funds had been sent and were gone. I want to know where they are going and how they are being used.

3 Likes
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I wanted to join in on the great discussion here and add that I have also thoroughly enjoyed working alongside @MatthewGraham and the @TokenLogic team. Their contributions have proven to be incredibly valuable and their unwavering dedication and support towards Aave is truly admirable. TokenLogic’s commitment to promoting transparency, organization, and sustainable growth for Aave and GHO is a refreshing and much-appreciated approach. I am delighted to offer my continued support to them, as I am confident that their efforts will lead to even greater successes for the Aave ecosystem in the future.

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It’s clear TokenLogic’s contributions and commitment to Aave so far.

The team has diverse perspectives and would add value by becoming a Service Provider but I wonder if this current proposal is the proper construct – there feels opportunity for improvement.

It feels a little too much like Llama 2.0…

I echo @0xkeyrock.eth’s sentiment shared above the scope is too broad.

In particular, we would be more supportive if Treasury Management and Financial Reporting was omitted from this scope. We believe there are stronger teams with more relevant experience.

Quickly the “cost-conscious” DAO’s expenses are ballooning in August:

Chaos 400k
BGD 2.2mm
Sigma Prime 162k
TokenLogic 350k

It seems worth slowing this down, better evaluating alternative proposals (and RFPs @benhoneill), and encouraging more specialization – especially while Llama has a month left to execute its scope.

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TokenLogic has shown a lot of potential for the DAO. The work scope is too broad and it feels that it could be too similar to what ACI does. TokenLogic could be a good BD team for AAVE, but anything related to Finance and treasury Management should be delegated to another SP with a strong track record.

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Well the scope in the recent Flipside has been too broad too imho…
And to add some more thoughts, i do echo there is the need of a finacial update, maybe monthly of how funds have been used. This should be transparent to us Aave holder in order to estimate future budgets and their fair value.
For example the ACI only asked for 250k and has quite a similiar scope when checking both TEMP CHECKS.

Its up to the DAO but i think we should take more care of how much a service provider should receive. And if they need that much, i want to see it explained in detail. Every bank would do the same and every company so we shouldn’t play with that money.

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I would say TokenLogic has a strong track record when looking at the member but i agree the scope needs to be more defined.

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There is a Messari proposal that didn’t level up: [TEMP CHECK] Aave x Messari Protocol Services - #6 by JackPurdy_Messari I would like to see a financial report from an external vendor rather than from a service provider like Llama or TokenLogic. I think what we are missing as a DAO is a comprehensive report about the current state of things as a whole, what things are missing, and what things can be improved, We need to shift the way we engage with the SPs by telling them what we need, not the opposite. The current conversation around this proposal is a good first step: [Temp Check] Implementation of an RFP Framework for Service Provider Engagements many players trying to do the same thing is not healthy.

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I totally agree but there is one problem i see. Who do you think has enough knowledge to tell what the DAO needs?
I am quite active and still i would say i couldn’t answer this, at least not alone by myself.
That would be something a new service provider should do. Find these things and tell the DAO about it and maybe even estimate costs if possible.

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100%, maybe it’s a task for an external auditor, but we are coming to a point that we need that report.

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Hi Everyone,

Thank you for participating in the discussion. It is great to see many contributors commenting on the proposal.

Based upon the feedback above, we have amended our propsal to cater for the emergence of a potential RFP process in the future. To this end, we have made the following adjustment:

Upfront Transfer: 210,000 0 GHO
Stream: 140,000 350,000 GHO

This is a 60/40 0/100 split of upfront/streamed.

If the RFP process is to adopted our reward stream will be cancelled or amended in line with any future work scope. This provides the DAO with the following:

  • Maximum flexibility going forward
  • Avoids any delay to existing work scopes
  • Recognises our ongoing contribution to Aave

We welcome other contributors to the Aave ecosystem, and are happy to implement proposals put forward by other teams. We have invested time, funds and effort in developing the skills necessary to implement changes to Aave Protocol. We firmly believe all of the DAOs funds shall remain controlled by the DAO via the on-chain governance process wherever possible.

In response to some feedback, we can share the following details about the team supporting this proposal:

@DeFiJesus - Solidity Developer
@agentmak - Frontend Developer
@scottincrypto - Backend Developer
@Dydymoon - Strategist
@MatthewGraham - Strategist
Accounting Team (currently reviewing legal contracts)

We also intend to onboard an additional developer to provide more capacity and redundancy within the team. When fully resourced, the team will be around 4.5, or more, FTE. We also use a graphics designer to support the frontend design which is included in the FTE count due to its adhoc nature.

We intend to move forward with our proposal as we are actively contributing to the Aave Protocol, Safety Module modelling, Treasury Management and GHO adoption. We would like to highlight that we are flexible and will work to accommodate the outcome of any RFP process by way of amending the payment stream to reflect any progressions within the DAO.

The below highlights work that is live on various governance forums:

There were also a couple GHO specific integrations announced and there are others soon to be announced as well.

Due to recent personal changes within the Aave Community, TokenLogic is being added to many GHO discussions. TokenLogic is becoming the focal point for GHO integrations.

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The TokenLogic team has contributed a lot to Aave and we think they would be a great service provider for GHO Liquidity / Incentives Management, GHO adoption, and Safety Module improvements. For treasury management and financial reporting, there are many candidates and we’d like to see an RFP process.

It would be helpful to have a breakdown of the proposed budget (350k GHO) by focus areas, ie., X GHO for for safety module improvements, Y GHO for treasury management, etc. This way, if the DAO decides to pursue an RFP for one of the focus areas, we would have clarity now on how much to amend the TokenLogic stream, instead of having to debate about it later and delay action.

5 Likes