Towards the Future of Aave: Governance Delegation & Key Pillars
Aave has just recently rolled out the V2 governance system, allowing anyone to delegate their voting and proposal creating power. On that front, I’m writing this article as a soft “pitch” for my delegation.
With that said, my overarching goal here is not to get you to delegate to me, but rather to get you involved in governance. If you walk away from this with a better idea of just how much of an impact you can make, I’ve done my job!
Now, before we talk about the first proposal I would like to bring to a vote, let me explain my key principles. These are my guides- I will always vote in accordance with my principles.
Anyone should be able to understand the goals, motivations and consequences of a proposal. If I cannot understand why the proposal would benefit the Aave ecosystem, I cannot vote for it.
Every proposal’s goals, motivations and consequences must be simple, clear cut and concise.
Aave is a decentralized autonomous organization, or a DAO. We, as governance participants, are the ones responsible for the protocol’s security. There is currently over two billion dollars worth of funds locked in Aave. We do not have the luxury to put these funds at risk.
Any proposal that implements changes to the protocol’s core functionality must be thoroughly vetted.
3. Long-Term Vision
This is barely the beginning of DeFi. We have only just begun to grasp what this technology is capable of. We’re potentially participating in one of the greatest financial revolutions in recent history. In other words, we must look forward. I firmly believe that it is more important to maintain a strong depositor and borrower base than to favor short-term financial gains.
We must prioritize long-term growth of the protocol by cementing it’s position as the leading liquidity protocol of DeFi.
4. Proper Risk Management
As attractive as it may be to add numerous assets to Aave, as those responsible for the integrity of the protocol, we must be wise and complete our due diligence before adding any asset. Every new collateral asset increases the risk to both stakers and potentially depositors. I intend to further discussions about risk tranching that would allow for new markets with different, more aggressive risk parameters to exist.
We must carefully implement new tokens. Every addition must be appropriately risk-assessed and discussed in the governance forums.
5. Bridging TradFi
Aave is in a very unique position to lead the effort of bridging traditional financial assets into the decentralized financial space. “Real” assets like tokenized real estate and debt must be bridged into DeFi to further mass adoption.
In alignment with the long-term growth of the protocol, I intend to wholeheartedly, but not blindly, push for new tokenized asset markets to be implemented.
6. Funding Innovation
I fundamentally believe that those that push for new, secure and beneficial innovations in the Aave protocol should be rewarded. I am in support of grants, bounties and hackathon rewards as a DAO. Aave would not be at all where it is today without the incredible talent out there in the ecosystem.
We must do our part to further innovation in the entire DeFi ecosystem through grant programs (i.e. Gitcoin), bounties and hackathons.
7. Rewarding Stakers
I believe that the current (yet to be implemented) proposal using the Aave ecosystem reserve to fund the security module stkAAVE and BPT staking is sufficient for now. Fees sound great on paper, but in reality we must do our absolute best to push for the growth of the protocol before implementing a long-term fee structure. This is one of the reasons we have the ecosystem reserve.
Although, I intend to, in the mid-to-long term, push for staking rewards originating from the collected reserves. In the short term, we are better off using the collected reserves to fund growth and innovation.
We must ensure that stakers, who bear the brunt of the protocol’s risk, are adequately rewarded. This should be from the ecosystem reserve in the short term, and from the collected reserves in the long term.
8. User Experience
In alignment with my views on prioritizing the long-term growth of the protocol, I do not believe we should implement (or change the currently near-nonexistent) origination fees. They are, in my eyes, an unnecessary deterrent to borrowers, and the lack of origination fees is a fantastic value proposition for individuals and businesses alike to use DeFi. The reserve ratio will, in my eyes, prove to be enough. I am of course open to discussion though!
We must prioritize the user experience both for borrowers and depositors. Aave is only as strong as its user base, and we must not implement aggressive fees that could negatively impact that base.
Every proposal I intend to attempt creating or voting decision that I intend to take will be extensively discussed before execution, giving any delegator enough time to revoke their delegation, should they not agree with me.
I will be honest, transparent and faithful to my principles in all decisions that I make. If I do not understand something, I will ask questions about it until I do.
Everyone has a voice. If you delegate to me, I want to know why. I am easily reachable and will respond to your messages. In fact, I would love to have conversations about governance proposals!
Each and every participant has a voice, and I intend to do my best to hear that voice out.
Alright! So those are my ten guiding principles. If you feel aligned with them and choose to delegate your power(s) to me, please make sure you also know what I am not: an expert.
I’m just a regular person who finds DeFi wildly exciting! I have no more qualifications than the average Joe. Thing of delegating to me as delegating to my principles.
If you decide those principles are aligned with your vision, delegate to: 0xF4F56fA0D045ae0e6Ba8f82e2C32887FE0B152Ea
Lastly, let’s talk about the first proposal I intend to push for, (or put forward, were I to amass enough delegated proposal power):
Proposal: UNI-V2 Market
This proposal maintains the same exact parameters as the UNI-V1 market of Aave V1, without the sETH-ETH or LEND-ETH pairs. I would also recommend against including the AAVE-ETH pair since it would likely fragment liquidity between the 80/20 BPT and the UNI-V2 token.
Here is the table:
These are all pairs that existed in the UNI-V1 market with the same risk parameters, which may potentially become less restrictive over time. The market would also contain ETH, DAI, USDC and USDT with the same parameters as the main market. Additionally, I intend to work towards the implementation of the following pairs with appropriate risk parameters in the future:
- DPI-ETH pair
- YFI-ETH pair
- UNI-ETH pair
Longer term, I will aim for the ability to borrow liquidity pool tokens. This could have many interesting use cases, as well as generate additional yield for liquidity pool token holders.
Once the UNI-V2 market is implemented (regardless if I am the one to propose it), I expect to see a whole lot of eyes on Aave. It would mark a significant milestone since Aave would transition to becoming a multi-market liquidity protocol, instead of a simple lending market.
After this bootstrapping, my next priority is to work towards saving the stuck LEND and AAVE tokens.
Currently, Julien Bouteloup is proposing to add CRV to the protocol. CRV is a well battle-tested token with a solid track record. I am FOR its addition!
I absolutely cannot wait to see how Aave evolves!
After the UNI-V2 market, nothing is stopping us from implementing BPTs (in the same or in a different market), real-world assets (in the works if I recall) and more!
To put things into perspective, “Citizens Financial Group” is the 15th largest bank in the United States (source: bankrate.com). It has just about a 15 billion US dollars of market cap. Although it’s difficult to compare a decentralized protocol to a regular corporation, Aave has 1.3 billion US dollars of market cap. Think about that for a second. Think about how much room we have to grow…
I don’t know about you, but I believe Aave can far surpass the 15th biggest bank in the USA.
And I’m going to tag along for the ride!