Executive Summary
This article explores the design and implications of the Aave V4 Reinvestment Controller. The goal is to provide the community with a data-driven framework for discussing how the protocol can optimize idle liquidity, enhance lender yields, and create new revenue streams for the DAO. Analysis of the USDT market throughout 2025 reveals that the protocol maintained a substantial liquidity buffer, averaging over $1.16 billion in idle capital. This unutilized inventory created a persistent drag on lender returns, resulting in an average deposit APY of 4.00% that significantly lagged behind the Secured Overnight Financing Rate (SOFR) and the borrowing rate of 5.71%. To mitigate this yield gap, the Reinvestment Controller proposes sweeping this idle float into low-risk, yield-bearing strategies such as money market funds or short-term Treasuries. Simulations indicate that active management could have significantly enhanced deposit rates while generating a secondary revenue stream for the DAO. However, integrating off-chain assets introduces liquidity latency risks, as historical data demonstrates that withdrawal shocks are often front-loaded and cumulative. To preserve protocol solvency, the research advocates for a dynamic Interest Rate Model that calibrates the optimal utilization point against the maximum theoretical utilization. This ensures that interest rates respond to the true economic availability of liquidity, protecting the protocol even when physical cash reserves are deployed into external strategies.
Scope and Methodology
As the Aave protocol transitions to its V4 architecture, integrating the Reinvestment Controller into the unified Hub provides a mechanism to improve capital efficiency without compromising solvency. This research evaluates the feasibility of this module through a multi-dimensional analysis. The study begins by quantifying the historical cost of idle capital in the USDT market during 2025. It then examines architectural integration paths and analyzes historical withdrawal shocks to establish safety constraints. Based on these findings, the report models the impact of liquidity latency on the Interest Rate Model (IRM). It proposes a dynamic calibration to mitigate the risks associated with off-chain redemption cycles. Finally, it assesses the viability of specific Real-World Asset (RWA) candidates against strict liquidity and legal criteria.
1. Aave Idle Capital
In the current Aave architecture, a significant portion of deposits remains idle to ensure instant withdrawal availability. While this liquidity buffer is a core safety feature, the 2025 data suggests that its size often exceeds what is necessary for daily operations, creating a persistent drag on the Deposit APY.
1.1 Liquidity Inventory
The graph below visualizes the relationship between Total Deposits and the Idle Capital (the liquidity buffer) within the USDT market.
Throughout 2025, Total Deposits grew significantly, reaching nearly $8B. However, Borrowed Capital did not scale at the same rate, leading to an increasing amount of idle capital in the system. On average, the market maintained $1,164.2M in idle liquidity, with an average utilization of 75.71%.
1.2 Utilization Trends
Utilization is the primary driver of Aave’s current interest rate model. When utilization is low, supply rates drop as the reduced interest paid by a few borrowers is spread across many lenders. In the following graphs, we contrast the Secured Overnight Financing Rate (SOFR) with Aave borrowing and lending rates over 2025.
As illustrated in the preceding graphs, the Aave Deposit APY (averaging 4%) has been consistently lower than the SOFR benchmark throughout 2025. This persistent yield gap suggests a structural incentive for large depositors to migrate USDT into tokenized Treasury products. Notably, while lenders received 4%, borrowers paid an average of 5.71%, a rate predominantly higher than SOFR. This spread indicates that Aave has the inherent capacity to generate competitive yields; however, these returns are currently diluted by the significant portion of idle, underutilized liquidity.
1.3 Yield Enhancement
By deploying idle liquidity into risk-free rate strategies, the protocol can offer a higher “Enhanced APY.” Based on 2025 simulations, reinvesting this capital could have boosted the deposit rate from 4.00% to 4.93%, assuming 100% reinvestment of idle liquidity, inclusive of a 10% performance fee for the DAO.
In the graph below, we can see the rolling APY boost, which ranges from 0.25% to 1.75% and is heavily influenced by the utilization rate.
1.4 DAO Revenue Impact
Assuming a 10% performance fee (consistent with the current USDT reserve factor), the Reinvestment Controller can introduce a secondary fee stream. This is particularly effective during low-utilization periods, where the extra fees can provide a significant boost to the DAO treasury without increasing costs for borrowers. As depicted in the following graph, during periods of low utilization, DAO fees can double, though this is highly dependent on the amount reinvested.
2. Mechanics of Integration
We believe there are two primary architectural paths for integrating the Reinvestment Controller. The choice between them depends on whether the DAO prefers a user opt-in model or a global protocol-managed model.
It is important to emphasize that this analysis is an initial study. It does not represent a final recommendation, and the eventual implementation may differ from the paths outlined here.
2.1 Alternative 1: Direct Hub Reinvestment (Protocol-Managed)
The Direct Hub model is built for protocol-wide efficiency and simplicity. Under this approach, the service providers, with the approval of the Aave DAO, set a global policy via the Reinvestment Controller to deploy a portion of the pool’s total idle liquidity. No user-facing action is required to benefit from the higher supply rate.
Within this model, we have found mainly two ways in which to equilibrate liquidity and reinvested capital:
- The Multiplier Approach: Reinvesting a fixed percentage (α) of currently idle assets. This ensures the cash buffer grows proportionally to the pool. It would likely be beneficial to reduce α as utilization increases.
- The Target Buffer Approach: Maintains a specific idle liquidity percentage of total deposits (e.g., 10%) at all times, reinvesting any amount that exceeds this threshold.
As borrowing demand increases, the Reinvestment Controller should trigger a reclaim() to restore the necessary cash buffer. Because the reinvestment amount is a function of current market conditions, it would act as a self-regulating valve that prioritizes liquidity during high-demand periods.
2.1.1 Example: Direct Protocol Reinvestment
In this comparison, we examine how two formulas behave as market utilization (Ď…) rises from 70% to 85% in a $1M USDT pool.
In Option A, the safety buffer shrinks as utilization rises. At the same time, in Option B, the protocol reclaims funds to keep $100,000 cash reserve constant.
While operationally efficient, this model concentrates decision-making at the DAO level, creating specific regulatory challenges detailed in Section 6.1.
2.2 Alternative 2: The Staking/Cooldown Model (User-Driven)
The Staking model introduces a tiered liquidity system that allows users to choose between instant liquidity and enhanced yield. Lenders who do not need instant access to their funds can stake their aTokens, effectively granting the protocol permission to reinvest the idle liquidity backing their specific deposit. To earn the Enhanced APY, these users accept a mandatory cooldown period (expected 0-2 days) for unstaking. This exit delay provides the Reinvestment Controller with the time required to redeem funds from RWA strategies.
Even for staked users, the amount of capital actually swept out of the Hub is dynamic. The formula ensures that, as general market utilization rises, even staked capital is returned to the Hub to facilitate borrowing. Once a user decides to exit, they enter a redemption queue; upon the cooldown completing, their staked position is converted back to standard aTokens, which can then be redeemed for the base asset.
This model could also allow for shielding the unstaked users from potential losses on the reinvested capital. To avoid altering the current Aave risk assumptions.
Example: User-Tiered Reinvestment (50% of Pool Staked) In this scenario, total deposits are $1M, but only $500k is staked. The reinvestment rate is set to 1.0 for the staked portion.
Even though users have staked $500k, the protocol only reinvests $150k at a 70% utilization rate. If demand rises to 85%, the system reclaims $75k of the reinvested capital, ensuring the Hub has sufficient physical liquidity.
2.3 Comparative table
| Feature | Alternative 1: Direct Hub (Protocol) | Alternative 2: Staking (User-Driven) |
|---|---|---|
| User Action | None (Global Policy) | Opt-in (Staking required) |
| Redemption Access | Instant (for all) | Delayed (Cooldown for stakers) |
| Yield | Enhanced APY for the whole pool | Enhanced APY only for stakers |
| Risk Model | Multiplier Approach: Reinvests a fixed % alpha of idle assets. | Liability Matching: Reinvests only staked funds; aligns exit windows. |
| Legal Risk | High (Active management perception) | Lower (User consent/alignment) |
3. Liquidity and Redemptions
This section examines historical USDT liquidity shocks to ensure the Reinvestment Module remains compatible with Aave’s safety requirements. By decomposing these spikes, we identify the primary catalysts of volatility and their specific implications for safety buffer sizing.
3.1 Volatility Drivers
The “Market Anatomy” graph below attributes every significant 1-day utilization spike to either new borrowing or lender withdrawals by analyzing changes in deposited and borrowed amounts over 1 day.
Key Finding:
- In the top 10% of utilization spikes (represented by the squares in the chart), withdrawals accounted for 98.6% of the impact, while new borrowing contributed a negligible 1.4%.
- The clustering of extreme events along the Y-axis (Withdrawal Volume) shows that large withdrawals are the primary threat to protocol liquidity.
- The low correlation (-0.20) and low R² (0.22) indicate that borrowing activity is not a reliable leading indicator of a liquidity drain. Extreme withdrawals seem to happen independently of market borrowing trends, requiring a robust, static safety buffer. Also, it appears that reductions in the borrowed amount somewhat compensate for large withdrawals.
3.2 Liquidity Volatility
To ensure the Reinvestment Module remains safe during periods of market stress, we must quantify not just how much liquidity leaves the protocol, but how quickly it does so. The speed of these “contraction events” can help determine the maximum allowable redemption window for any reinvestment strategy.
The following analysis examines the historical volatility of USDT liquidity drains over three time horizons: 1, 3, and 5 days.
Velocity of Contraction
The data reveals that liquidity drains are often front-loaded. While the average daily utilization increase is relatively small (2.97%), the 95th percentile (VaR95) shows that significant shocks occur regularly:
- 1-Day Horizon: Shocks exceeding 9.80% occur 5% of the time.
- 3-Day Horizon: Cumulative shocks grow to 14.07%.
- 5-Day Horizon: Cumulative shocks reach 16.17%.
Historical Extremes
A key insight from the data is that liquidity shocks in the USDT market are front-loaded. The magnitude of a 1-day extreme shock (up to 24.04%) is nearly identical to the magnitude of a 5-day cumulative shock (up to 24.17%). This suggests that during a large-scale withdrawal event, the majority of capital exits within the first 24 hours.
| Event Date | 1-Day magnitude | 3-Day magnitude | 5-Day magnitude |
|---|---|---|---|
| May 2025 | 24.04% (May 08) | 25.05% (May 08) | 23.55% (May 08) |
| Nov 2025 | 23.81% (Nov 16) | 14.88% (Nov 16) | 12.30% (Nov 16) |
| March 2025 | 21.64% (Mar 19) | 21.87% (Mar 19) | 24.17% (Mar 19) |
Magnitudes expressed as a percentage of Total Deposits (Utilization increase).
3.3 Redemptions and Safety Conclusions
Based on this preliminary analysis, we can draw some initial insights for the integration of the Reinvestment Controller:
- There is a clear trade-off between liquidity and reinvested capital: the more that is reinvested, the lower the liquidity will be.
- Since the risk is almost exclusively “Withdrawal-Driven,” the Staking model (Alternative 2) could be an effective mitigation tool. By requiring a cooldown period for the very lenders whose capital is being reinvested, the protocol aligns the RWA strategy’s redemption window with the user’s exit window, potentially reducing unannounced 1-Day liquidity shocks.
- Liquidity should be a primary criterion when selecting an RWA strategy to ensure reinvested capital can be quickly accessed to meet large capital movements.
- The ability to automatically change the IRM can be a very powerful tool for stabilizing the protocol as its complexity increases.
4. Interest Rate Model (IRM) Implications
In Aave V4, reinvested assets are included in the denominator to ensure that the interest rate curve reflects the true economic availability of liquidity, rather than just the physical cash present in the Hub at a given moment.
Because swept assets are treated as available liquidity, the utilization rate can stay low even if the Hub is physically empty of cash. This prevents the reinvestment strategy from accidentally pushing the borrow rate into the high-slope kink of the IRM. However, another implication is that there might be no liquidity in the Hub while utilization remains below uOptimal; thus, rates would continue to be low without incentives for either borrowers or lenders to react. This scenario can be problematic, as it would suspend redemptions and could impair liquidations. If physical liquidity reaches zero because all assets are either deployed to borrowers or swept into reinvestment strategies, the protocol would lack the necessary underlying assets to facilitate user exits or collateral seizures.
To mitigate the risk of a liquidity crunch caused by settlement latency, the protocol requires a mechanism to preserve physical cash reserves while off-chain assets are being redeemed. While the Reinvestment Controller manages the primary allocation strategy, external settlement cycles—often ranging from T+1 to T+2 and extending further on weekends or holidays—create a window of vulnerability in which physical liquidity could be exhausted before swept assets are returned. To prevent a scenario where the protocol is solvent but illiquid, we propose calibrating the Interest Rate Model (IRM) against a maximum theoretical utilization rate (μm). This metric represents the threshold at which all physical liquidity currently held in the Hub would be fully utilized by borrowers:
By dynamically setting the optimal utilization point (uOptimal) approximately 3% to 7% below ÎĽm, the system ensures that interest rates respond to the scarcity of immediate physical liquidity rather than total theoretical solvency. As physical reserves deplete, this configuration triggers a sharp increase in interest rates, mimicking the defensive mechanics of Aave V3. This price signal serves a dual purpose: it incentivizes immediate repayments and deposits to replenish the buffer, and it compensates lenders for the increased liquidity risk during the interval required for the Reinvestment Controller to unwind external positions. This ensures the protocol remains operational and liquid, even when a significant portion of capital is deployed into strategies with asynchronous settlement.
4.1 IRM Adaptation in a Reinvestment Environment
To maintain Aave’s safety standards, the Interest Rate Model could be dynamically updated whenever the Reinvestment Controller changes the swept amount. Without this adaptation, the protocol could fall into a liquidity trap where physical cash is exhausted before the interest rate curve can signal a shortage to the market.
4.1.1 Static IRM
If the protocol reinvests 20% of its capital but keeps the kink at the standard 92%, it creates a dangerous blind spot. Because 20% of the funds are off-hub, the Hub actually runs out of liquidity at 80% utilization. Under a static V3 IRM, the interest rates at 77% utilization would remain low, providing no incentive for borrowers to repay or lenders to deposit, even though the Hub is nearly empty.
4.1.2 Dynamic Kink Calibration
Aave V4 could solve this by anchoring the IRM to the Maximum Theoretical Utilization (μm), which represents the Hub’s absolute physical liquidity limit.
As shown in the graph above, we can see the protocol’s response in a scenario with 20% swept liquidity (μm = 80%):
- Proactive Kink Adjustment: The protocol moves the uOptimal to 75% (5% below the physical limit).
- Early Warning Signal: At 77% utilization, the V3 model would charge only 4.18%, failing to signal a liquidity shortage. In contrast, the V4 dynamic is already above
uOptimal, pushing the rate to 7.50%.
By maintaining this 3–7% safety spread between uOptimal and μm, Aave V4 preserves the reactive mechanics of V3 while increasing the productivity of its idle capital.
5. RWA Reinvestment Candidates
The market for tokenized Real-World Assets (RWAs) has matured rapidly, offering Aave a diverse range of institutional-grade yield sources. As shown in the market snapshot below, several providers have already achieved significant scale.
While not strictly a tokenized RWA, it may also be worth exploring Coinbase Institutional USDC opportunities given their high liquidity and competitive yields.
While the quantity of options is vast, we believe the Aave DAO should focus on candidates that align most closely with the protocol’s unique operational requirements. The “ideal” partners, from a risk perspective, should meet the following criteria:
- Liquidity Velocity (T+0 to T+1): We should prioritize funds that offer atomic or same-day redemptions.
- Low Volatility (Money Market Focus): To protect the Hub’s accounting and the 1:1 backing of aTokens, the strategy should focus exclusively on Money Market Funds (MMFs), ensuring the net asset value (NAV) remains stable and protected from interest-rate fluctuations (duration risk).
- Multi-Stablecoin Interoperability: The Reinvestment Controller must be able to move and efficiently reinvest various stablecoins. The funds should allow for seamless deposits and redemptions across multiple stablecoins (USDT, USDC, RLUSD, PYUSD, DAI, EURC).
- Clear Legal Status & Fee Efficiency: The selected candidates must provide high legal assurances to ensure bankruptcy remoteness. Furthermore, we must prioritize funds with competitive fee structures to ensure that the yield boost passed to lenders and the DAO treasury is not significantly eroded by management overhead.
6. Legal Implications
6.1 Regulatory Exposure of Protocol-Managed vs. Opt-In Models
A protocol-managed reinvestment model is legally the most exposed because it concentrates discretion in a governance-controlled mechanism that deploys user-supplied assets into external strategies without a user election at the point of deployment. Even if the Hub “still owns” swept assets economically and can reclaim() them, the operational reality is that governance (and the service providers it authorizes) is selecting investment exposures, selecting counterparties, setting deployment ratios, and determining when to unwind. Regulators may view that as less passive, algorithmic interest formation, and more like organized asset management for the benefit of a defined user group (depositors). The legal risk, in this case, is that it may become easier for regulators and litigants to argue (i) an identifiable operator is exercising managerial efforts, and (ii) users are relying on those efforts for yield and liquidity outcomes, including performance and redemption timing. The “performance fee” framing compounds this, because it reads as compensation linked to external strategy yield rather than a purely protocol-native spread.
An opt-in staking/cooldown tier is typically more defensible because it aligns economic consent with the changed liquidity profile: users who elect the “enhanced APY” accept ex ante that redemptions may be delayed to accommodate the external strategy’s settlement/redemption cycles. Operationally, opt-in also allows a cleaner compliance story if the eventual reinvestment leg requires eligibility gating. If the reinvestment vehicle can only accept allowlisted/verified beneficial owners, the opt-in tier shall be either restricted to eligible addresses or an eligible wrapper shall be used. Real-world tokenized MMF/T-bill products routinely impose onboarding and allowlisting at the holder level, which is the friction that the designing efforts should take into consideration.
6.2 The Necessity of a Legal Wrapper and DAO Agent
In practice, the DAO requires a permissioned vehicle that serves as the contracting counterparty and the holder of record for the relevant fund shares (or tokenized share interests). That vehicle would execute the subscription documentation, provide representations and warranties as to investor eligibility and compliance, maintain the AML/sanctions controls required by the issuer and/or administrator, and administer the redemption process. As a practical matter, a DAO cannot engage with regulated off-chain financial products absent a legally cognizable actor capable of (i) entering into contracts, (ii) holding legal title, (iii) opening and maintaining bank, brokerage, and custody accounts, (iv) making onboarding and eligibility representations, and (v) assuming liability in the event of breach.
Once a DAO wrapper or DAO agent is established, a distinct liability and regulatory perimeter is created. That entity will predictably become the focal point for contractual claims, regulatory inquiries, and enforcement activity, as it is the legal person executing agreements and holding assets. In many respects, that is the intended function: to contain risk and enable enforceable governance over off-chain operations. However, the structure must be calibrated to avoid inadvertently recharacterizing user deposits as unsecured claims against the vehicle.
6.3 Asset Segregation and Insolvency Characterization
A key legal implication concerns asset segregation and insolvency characterization. Where the vehicle holds fund shares in its own name and users’ rights remain limited to an on-chain claim against the protocol, it becomes necessary to determine whether the vehicle holds such assets on a trust or agency basis for users (and how that relationship is documented), or whether users are instead economically exposed to the vehicle as an intermediary counterparty.
6.4 Compliance Obligations and Governance Standards
Another implication relates to compliance obligations. A permissioned fund will require AML/sanctions representations, impose transfer restrictions, and mandate onboarding processes. If the DAO wrapper is the sole eligible holder, the wrapper must satisfy those requirements, notwithstanding the practical difficulty of implementing DAO-wide policies, screening, and contractual rights to freeze or refuse interactions across a decentralized participant base.
The third implication is governance and the standard of care. A wrapper with directors and officers (or equivalent controllers) will owe duties under its constitutive law to act in the entity’s interests and within its stated objects. Where the entity is affecting strategy selection and counterparty engagement on the DAO’s behalf, it will require a binding mandate that limits discretion, allocates responsibility, and provides enforceable oversight mechanisms (including auditability, reporting, incident response, and termination rights).
6.5 Specific Regulatory Gates for RWA Candidates
While reviewing certain tokenized RWA options referenced above, we can identify clear determinative requirements:
- For BUIDL, the determinative gates are the US$5m initial ticket, the private-offering investor status constraints, and the ability to clear Securitize KYC/beneficial-owner review and to provide an acceptable wallet and bank account profile for minting/redemption controls.
- For USYC, the determinative gates are the non-U.S. person/non-U.S. institutional perimeter, the US$100k minimum, and successful completion of KYC/AML for administrators, as well as wallet screening/whitelisting.
- For USTB, the determinative gates are supported-country acceptance, institutional QP threshold, proof of accredited investor status for fund application access, the US$100k initial minimum from the fund prospectus, and (if onchain holding is desired) operational readiness for allowlisting
6.6 Regulatory Analysis of Coinbase Institutional Yield
Herein, we examine Coinbase’s USDC yield offering for institutional clients, with a focus on U.S. legal considerations. Coinbase’s institutional prime brokerage platform provides yield on USDC deposits. Institutional clients holding USDC on Coinbase Prime may earn passive rewards across two tiers: a “simple” reward (fully liquid, no lockup) of up to 3.35% APY, and an “enhanced” yield through PrimePlus of up to 5.75% APY, where USDC is lent under longer commitment terms. The “simple” reward is functionally analogous to interest for maintaining USDC on the platform. In contrast, PrimePlus operates on the basis that Coinbase (or an affiliate) borrows the USDC for a defined period, offering a higher rate in exchange for the term commitment.
Coinbase Custody (as an institutional qualified custodian) is, in isolation, a safekeeping service; however, when coupled with Coinbase Prime, clients’ USDC balances may accrue the same reward mechanics.
The yield paid to USDC holders on Coinbase is supported by a combination of revenue-sharing arrangements and Coinbase’s own funding capacity:
- (i) USDC Reserve Interest Sharing: Coinbase and Circle (as issuer of USDC) maintain a revenue-sharing arrangement in respect of interest earned on USDC’s fiat reserves. Under that arrangement (as described in Circle’s disclosures), Circle pays Coinbase a portion of reserve interest income calculated by reference to the quantity of USDC Coinbase holds on behalf of customers. In substance, Circle and Coinbase split the interest generated by USDC’s underlying reserves (held in cash and treasuries), and Coinbase may apply its portion of that interest income to fund the USDC rewards program for customers. Coinbase has described its USDC Rewards as a “loyalty program offered at Coinbase’s discretion”.
- (ii) Coinbase-Funded Rewards: Critically, Coinbase does not lend or otherwise deploy customers’ USDC to generate the base reward; instead, it pays such reward from its own resources (including, presumably, the foregoing revenue share and/or other corporate funds. Coinbase’s user agreement further states that it “does not use or lend (…) USDC” absent user instruction, reinforcing that custody-based rewards do not, of themselves, imply any reallocation of customer USDC by Coinbase.
- (iii) PrimePlus and Enhanced Yield: With respect to the higher PrimePlus yields offered to institutions, Coinbase itself serves as the borrower and/or counterparty. In that structure, an institutional client may agree to lend USDC to Coinbase (or a Coinbase affiliate) for a fixed term or under agreed conditions, in exchange for an enhanced interest rate. Coinbase may then deploy the borrowed USDC—by way of example, into low-risk interest-bearing instruments or as liquidity extended to vetted borrowers—to generate a return.
6.6.1 Implications of the GENIUS Act and Yield Structure
Providing yield on USDC—effectively, interest on a stablecoin—operates within a complex U.S. regulatory perimeter. For purposes of this commentary, the focus is confined to the GENIUS Act, although securities law, consumer protection, and AML/CFT considerations should not be disregarded. The GENIUS Act expressly prohibits stablecoin issuers from paying interest or yield to stablecoin holders, which implies that Circle cannot directly pay interest on USDC to end users. The statute, however, does not expressly prohibit third-party yield arrangements based on stablecoin holdings. It should be noted that some commentators identify a residual nuance. Because Coinbase Custody holds USDC on customers’ behalf, Coinbase may be characterized as the legal “holder” of those USDC, and Circle’s material interest payments to Coinbase could be framed as the issuer indirectly paying yield to a holder. To date, regulators have not taken action against the Coinbase–Circle arrangement, which may reflect a view that the policy objective is preserved—retail USDC holders do not receive interest directly from Circle. Any yield they obtain is provided through a separate Coinbase program.)
Coinbase seeks to remain within applicable regulatory expectations through its licensing framework and through robust disclosures (including, for example, that such holdings are not insured, do not constitute bank deposits, and that the rewards program may be amended or discontinued).
6.7 Conclusion on Legal Personality and Authority
A successful deployment into any of the options described above is ultimately contingent on establishing a properly structured DAO agent or wrapper with clear authority to contract, hold title, satisfy onboarding and compliance requirements, and administer redemptions in a manner that preserves the intended risk allocation and avoids inadvertently converting user positions into unsecured claims against an intermediary. Absent such legal structuring, the proposed integrations are not realistically executable at institutional-grade counterparties. To date, and to the best of our knowledge, the DAO has neither initiated the formation nor implemented any such dedicated legal vehicle or formally appointed agent for these purposes.
Disclaimer
This research was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.