Inside Aave founder Stani Kulechov’s ‘grand plan’ as the $11bn DeFi lender leapfrogs MakerDAO

[ARFC] Aave | Flipside Crypto Facilitator [v2]

[ARFC] Cancel Llama Service Provider Stream 

[ARC] Gauntlet <> Aave Renewal

# Dynamic Risk Parameters



__Author(s): __

---
aip: 29
title: Dynamic Risk Parameters
status: Proposed
author: Nick Cannon (@inkyamze)
shortDescription: Continuous market risk management for Aave V2
discussions: https://governance.aave.com/t/proposal-dynamic-risk-parameters/4854
created: 2021-07-30
updated: 2021-08-02

---

## Simple Summary

A proposal for continuous market risk management to optimize yield, capital efficiency, and mitigate depositor losses.

## Abstract

Gauntlet proposes actively managing risk parameters for all Aave V2 assets. The targets metrics to improve are risk-adjusted yield for depsitors, capital efficiency for borrowers, and the mitigation of depositor losses. Gauntlet will improve the metrics above without increasing the net insolvent value percentage or the slashing run percentage.

## Motivation

Aave's Risk Framework shows the importance this community puts towards understanding and mitigating risk. Users are exposed to changing market risks at all times. Since publishing the Market Risk Assessment Gauntlet has continue to rerun our simulations. Our platform observes regular changes to the optimal risk parameters. 

## Rationale

See `discussions` for further information.

## Implementation

Current Aave v2 Total $ Borrow = ~$7.09B 

Current Number of Aave v2 Assets = 28

_Gauntlet quarterly service fee formula = log(Number of Assets,10) * Total $ Borrow * 2.5 basis points / AAVE price_
                                        = log(26,10) * $6,000,000,000 * 2.5 basis points / AAVE price ($376)
                                        = 5,645 AAVE
  
This AIP implements two payments to Gauntlet as outlined in the ARC, both denominated in stkAAVE. The stkAAVE is obtained by staking AAVE from the EcosystemReserve. The first payment is implemented as a direct transfer of the stkAAVE to Gauntlet. The second payment makes use of [Sablier](https://docs.sablier.finance/) to implement a streaming vesting payment over the course of half a year. This payment can be revoked by governance using `cancelStream`. Specifically we make use of the following transactions:
  - `transfer` `AAVE` tokens from the EcosystemReserve to the ShortExecutor using the Ecosystem Reserve Controller contract at 0x1E506cbb6721B83B1549fa1558332381Ffa61A93
  - `approve` the `stkAAVE` token to stake the `AAVE` we transferred
  - `stake` the `AAVE` into `stkAAVE`
  - `transfer` the non vested portion directly to the Gauntlet
  - `approve` the `Sablier` contracts to spend the remaining vesting portion of the `stkAAVE`
  - `createStream` on the `Sablier` contract, with the Gauntlet set as the beneficiary, to stream the vesting portion of `stkAAVE` over six months              


Exact calldata and target addresses can be viewed in the transaction which created this proposal.


## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

Discussion: 

# Dynamic Risk Parameters

# Add BarnBridge (BOND) to Aave

AIP-23

__Author(s): Anjan Vinod (ParaFi Capital)__



## Simple Summary

We are proposing to add BarnBridge (BOND) to Aave as collateral.

## Abstract

BarnBridge is building a suite of applications that allows users to mitigate risk across various use cases throughout DeFi. These applications rely on differentiated user profiles, referred to as tranches, in order to create markets for risks such as interest rate fluctuations and asset price volatility. Currently, SMART Yield on Ethereum mainnet has some $290M in TVL, while SMART Exposure and SMART Alpha are slated for Q3 of 2021. The BOND token is used to govern the BarnBridge DAO and allocate protocol resources.

## Motivation

BarnBridge is one of a handful of DAOs noted for its sizable allocation of its own native asset (see: open-orgs.info). It currently holds over 30% of the total BOND supply.

Adding BOND to Aave would provide a mechanism through which the DAO could finance growth, decreasing the need for excessive token distributions. Example use cases include: funding projects building on top of BarnBridge applications, paying salaries to key protocol participants, and hosting bug bounties that earn yield until paid out.

BarnBridge earns fee revenues from both deposits of underlying assets and redemptions of derivative assets. By adding BOND as collateral, the DAO and individual BOND holders can borrow against their position, increasing stablecoin demand and utilization on Aave v2. Additionally, BOND holders can lend out their position for a yield on Aave v2. Given BarnBridge’s direct role as an Aave liquidity provider, the addition of BOND to Aave v2 creates more synergies between Aave and BOND holders.

To start, it may make sense for BOND to have a conservative LTV and liquidation threshold which can be fine tuned further down the line.

## Specification

1. What is the link between the author of the AIP and the Asset?
  
  - Seed investor in BarnBridge

2. Provide a brief high-level overview of the project and the token
  
  - BarnBridge is a risk tokenizing protocol. It aims to reduce the risks associated with DeFi, such as inflation risk, market price risk, and cash-flow volatility   risk. By letting users select a risk profile, BarnBridge can redistribute risk via tokenized, liquid tranches. BarnBridge does this with its SMART Yield, SMART   Exposure, and SMART Alpha products, all of which address a specific DeFi risk category.

  - BOND token is a governance token that powers the BarnBridge DAO protocol. BOND is an ERC-20 token. Token holders have the ability to govern the network by       staking their holdings in return for the right to participate in on-chain voting and make decisions on the protocol development.

  - BOND total supply: 10,000,000 (minting function is disabled).
  - Token contract address: [`0x0391D2021f89DC339F60Fff84546EA23E337750f`](https://etherscan.io/address/0x0391D2021f89DC339F60Fff84546EA23E337750f)

3. Explain positioning of token in the Aave ecosystem. Why would it be a good borrow or collateral asset?
  
  - By adding BOND as collateral, the DAO and individual BOND holders can borrow against their position, increasing stablecoin demand and utilization on Aave v2. Additionally, BOND holders can lend out their position for a yield on Aave v2. Given BarnBridge’s direct role as an Aave liquidity provider, the addition of BOND to Aave v2 creates more synergies between Aave and BOND holders. BarnBridge currently provides ~$180M in liquidity to Aave v2 and will be launching a similar integration on Polygon in July.

4. Provide a brief history of the project and the different components: DAO (is it live?), products (are the live?). How did it overcome some of the challenges it faced?
  
  - BarnBridge was founded in September 2020. Since that time, BarnBridge succeed in launching the BarnBridge DAO and delivering a SMART Yield product which currently holds $280M+ in TVL with $178M providing to Aave. With the upcoming SMART Yield and SMART Exposure launch on Polygon, followed by the product we call SMART Secret and SMART Alpha (later) BarnBridge will be a full-established protocol with plenty of products and potentially with 1B+ in TVL after all our products launch.

5. How is the asset currently used?
  
  - BOND token is currently used for:

     - Staking in BarnBridge DAO to get exposure to voting rights in the DAO.
     - Liquidity providing on Uniswap, Sushiswap, and Bancor.
     - Lending on Cream finance.

6. Emission schedule
  
  ![BarnBridge BOND emission schedule](../assets/AIP-23/emission.png)

7. Token & protocol permissions and upgradeability
  
  - Protocol is upgraded by the BarnBridge DAO.  We used the Diamond Standard on a couple parts of the protocol so we could do seamless upgrades.  A users token "power" determines their vote weight and control they have in the DAO.

8. Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity)
  
  - Market cap: $96M
  - 24h Volume: $5.7M
  - Volatility: high
  - Exchanges: Coinbase, Uniswap, Bancor, Gemini

9. Social channels data (Size of communities, activity on Github)
  
  - Twitter: 19.4K
  - Discord: 6.2K
  - Medium: 4.1K

10. Contracts date of deployments, number of transactions, number of holders for tokens
  
  - Transactions: 116K
  - Token holders: 6.3k

## Rationale

BarnBridge will continue to grow as a distributor of Aave v2 stablecoin markets as its SMART Yield integration gains further traction. There are currently ~$180M worth of stablecoins deposited into Aave v2 through SMART Yield. This liquidity is provided without any expectation of being used, meaning BarnBridge is a pure liquidity provider for Aave. BarnBridge is also actively building an integration with Aave’s Polygon market. Future BarnBridge products, including SMART Alpha senior tranches for assets like wBTC and ETH, stand to provide Aave with relatively safer collateral given their ability to mitigate price drawdowns. 

## Test Cases

Test cases for an implementation are mandatory for AIPs but can be included with the implementation.

## Implementation

### Contracts

- Interest bearing aBOND address: [`0x170375B4aD477133a36B4961D9bcA6D5BF9C8389`](https://etherscan.io/address/0x170375B4aD477133a36B4961D9bcA6D5BF9C8389)
- Variable Debt variableDebtBOND address: [`0x21D0366D1D678fCf276954b7D651B9dfeE104D82`](https://etherscan.io/address/0x21D0366D1D678fCf276954b7D651B9dfeE104D82)
- Stable Debt stableDebtBOND address: [`0xb98EF546D1057f9750511FE16cBCC7Eb0FB6451F`](https://etherscan.io/address/0xb98EF546D1057f9750511FE16cBCC7Eb0FB6451F)
- Strategy Implementation for BOND address: [`0x273358d06Ca3862bf3C0691d1C8B4B4d3E906458`](https://etherscan.io/address/0x273358d06Ca3862bf3C0691d1C8B4B4d3E906458)

### Price oracle

The BOND price oracle will be served via [ChainLink](https://chain.link/), which includes the [BOND/ETH](https://docs.chain.link/docs/ethereum-addresses) feed, [here](https://etherscan.io/address/0xdd22A54e05410D8d1007c38b5c7A3eD74b855281).

### Interest model

- LTV 25%
- Liquidation Threshold 35%
- Liquidation Bonus 15%
- Reserve Factor 35%

Interest Rate Model

- UOptimal 45%

Variable:

- R_0 0%
- R_s1 7%
- R_s2 300%

Stable:

- R_s1 10%
- R_s2 300%


![BarnBridge BOND Aave interest rates](../assets/AIP-23/rate.png)

## References

- *Website*: https://www.BarnBridge.com
- *DAPP*: https://app.barnbridge.com/
- *Whitepaper*: https://github.com/BarnBridge/BarnBridge-Whitepaper
- *Project Management Portal*: https://github.com/BarnBridge/BarnBridge-PM
- *Youtube*: https://www.youtube.com/c/BarnBridge
- *Twitter*: https://twitter.com/Barn_Bridge
- *BOND token contract*: https://etherscan.io/address/0x0391D2021f89DC339F60Fff84546EA23E337750f

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).


Discussion: https://governance.aave.com/t/proposal-add-support-for-bond-barnbridge/4486

# Add BarnBridge (BOND) to Aave

#  Gauntlet <> Aave Renewal 2023

---
title: "Gauntlet <> Aave Renewal 2023"
author: "Gauntlet"
discussions: "https://governance.aave.com/t/arfc-gauntlet-aave-renewal-2023/15380"
---

## Summary

A proposal to renew Gauntlet’s 12-month engagement with Aave on continuous market risk management to maximize capital efficiency while minimizing the risk of insolvency and liquidations to create long-term sustainable growth. For more details, see the full forum post [here](https://governance.aave.com/t/arfc-gauntlet-aave-renewal-2023/15380). The engagement was pre-approved by the Aave community via Snapshot.

## Proposal

Since 2021, Gauntlet has been serving the DAO formally. Gauntlet’s Risk Management platform quantifies risk, optimizes risk parameters, runs economic stress tests, and calibrates parameters dynamically. We use agent-based simulation models tuned to actual market data to model tail market events and interactions between different users within DeFi protocols. Our simulations are constructed analogously to how transaction-level backtesting is done in high-frequency and algorithmic trading. Our platform provides similar statistical power in these actuarial analyses by modifying these techniques to handle the idiosyncrasies of cryptocurrencies.

Gauntlet’s features will cover Aave V2, Aave V3, GHO (new), and Insolvency Refund.

The engagement runs from Dec 28, 2023 to Dec 28, 2024. The annual fee will be a fixed fee of $1,600,000. This will be 50% in GHO and 50% in aUSDT.

Full details of the engagement scope, roadmap, expectations, and KPIs are covered in our [forum post](https://governance.aave.com/t/arfc-gauntlet-aave-renewal-2023/15380).

## Specification

The Proposal Payload does the following:

- 30% of the total annual fee (480,000 in aUSDT) will be deposited in a vault for the insolvency refund.
- The remaining 320,000 in aUSDT and 800,000 GHO will be streamed linearly over 1 year.

## References

- Implementation: [AaveV3Ethereum](https://github.com/bgd-labs/aave-proposals-v3/blob/6511febb79af17d938fd6ad97dfc2a5fdfdd2186/src/20231128_AaveV3Ethereum_GauntletAaveRenewal2023/AaveV3Ethereum_GauntletAaveRenewal2023_20231128.sol)
- Tests: [AaveV3Ethereum](https://github.com/bgd-labs/aave-proposals-v3/blob/6511febb79af17d938fd6ad97dfc2a5fdfdd2186/src/20231128_AaveV3Ethereum_GauntletAaveRenewal2023/AaveV3Ethereum_GauntletAaveRenewal2023_20231128.t.sol)
- [Snapshot](https://snapshot.org/#/aave.eth/proposal/0x8771479c821f55fe5fd16f939047de573203ac540282810a94ccf1bce2e2c021)
- [Discussion](https://governance.aave.com/t/arfc-gauntlet-aave-renewal-2023/15380)

## Disclaimer

Gauntlet has not received any compensation from any third-party in exchange for recommending any of the actions contained in this proposal.

## Copyright

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

_By approving this proposal, you agree that any services provided by Gauntlet shall be governed by the terms of service available at gauntlet.network/tos._


#  Gauntlet <> Aave Renewal 2023

AAVE

Aave is an Open Source and Non-Custodial protocol to earn interest on deposits and borrow assets

Ethereum	$9.697b
Arbitrum	$691.25m
Polygon	$383.26m
Avalanche	$270.77m
Optimism	$143.82m
Scroll	$100.41m
Base	$64.15m
Gnosis	$59.92m
BSC	$41.73m
Metis	$15.08m
Fantom	$47,261
Harmony	$0

Include in TVL (optional)
Borrowed	$7.498b
Staking	$226.91m
Pool2	$3.33m

Market Cap	$1.214b
	$81.69
Fully Diluted Valuation	$1.306b
	$85.91m
Staked	$226.91m
(18.7% of mcap)
	$7.498b
	$397.67m
	$70.39m
	$55.55m
	$48.7m

	$6.28m

AAVE (AAVE)

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