KVORUM
aaveSource: Aave governance v3 · #157

Aave v3 EtherFi Ethereum Activation

executedSep 8, 2024, 02:40 PM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

This AIP activates a dedicated Aave v3 instance on Ethereum for EtherFi's weETH token paired with stablecoins (USDC, PYUSD, FRAX), allowing weETH holders to borrow stablecoins against their weETH collateral. The new instance includes 50,000 weETH supply cap with 78% LTV, 140M USDC, 60M PYUSD, and 15M FRAX borrow caps respectively.

Type
protocol addition

Key changes

  • Register Ethereum EtherFi instance in Ethereum V3 PoolAddressesProviderRegistry with ID 45(high)
  • List weETH, USDC, PYUSD, and FRAX tokens on the EtherFi instance(high)
  • Configure weETH as collateral-only asset with 78% LTV and 81% liquidation threshold(high)
  • Enable USDC, PYUSD, and FRAX as borrowable assets with specified supply and borrow caps(high)
  • Assign PROTOCOL_GUARDIAN as POOL_ADMIN role and CAPS_PLUS_RISK_STEWARD as RISK_ADMIN role(medium)
  • Set weETH reserve factor at 45% and implement variable slope parameters (7% slope 1, 300% slope 2)(medium)
  • Configure supply caps: weETH 50k, USDC 140M, PYUSD 60M, FRAX 15M(high)
  • Configure borrow caps: USDC 135M, PYUSD 54M, FRAX 12M (weETH borrowing disabled)(high)

Notable concerns

  • Risk parameters for weETH deviate from original ARFQ due to technical validation constraints; values match Aave V3 Ethereum Mainnet market but do not enable weETH as borrowable
  • USDC liquidation protocol fee set to 10% for consistency despite USDC having no collateral enabled
  • weETH caps fill within minutes weekly on existing market, indicating potential capacity constraints may affect this instance as well
  • New instance design focuses on weETH/stablecoin pairing with zero debt ceilings across all assets
ContractsAave V3 EtherFi Ethereum instancePoolAddressesProviderRegistryweETH token contractUSDC token contractPYUSD token contractFRAX token contract
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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02Description

662 words

Simple Summary

This AIP activates an Aave v3 EtherFi instance in the Ethereum network, following ARFQ request, focused on weETH holders borrowing stablecoins.

Motivation

The demand for borrowing wETH on Aave using weETH as collateral is extremely high, with caps being filled within minutes each week.

While this $2B growth is welcomed and responsible for ~$12.5M yearly revenue (at current ETH prices) for the DAO, it has created some frustration for significant users looking to borrow stablecoins using their weETH as collateral.

With this asset being constantly at cap, users are wary of leveraging Aave for this use case as they have legitimate concerns about their ability to add more collateral/debt to (de)leverage following market conditions.

To provide weETH holders with more suitable options, we propose creating a dedicated weETH/stablecoin Aave v3 Instance.

This market also lays the groundwork for future integrations & synergies with EtherFi’s Cash product.

Specification

The Etherfi/Stables Aave v3 instance activation payload implements the following:

  • Pre-execution:
    • Register Ethereum EtherFi instance in Ethereum V3 PoolAddressesProviderRegistry with ID 45.
  • Execution:
    • Listing of weETH, USDC, PYUSD, and FRAX tokens.
  • Post execution:
    • Add PROTOCOL_GUARDIAN as POOL_ADMIN role
    • Add CAPS_PLUS_RISK_STEWARD as RISK_ADMIN role
    • Seed amounts
    • Pay Catapulta service fee

The table below illustrates the configured risk parameters* for Aave v3 EtherFi Ethereum instance:

ParameterweETHUSDCPYUSDFRAX
Isolation Modefalsefalsefalsefalse
BorrowableDISABLEDENABLEDENABLEDENABLED
Collateral Enabledtruefalsefalsefalse
Supply Cap50,000140,000,00060,000,00015,000,000
Borrow Cap0135,000,00054,000,00012,000,000
Debt CeilingUSD 0USD 0USD 0USD 0
LTV78 %0 %0 %0 %
LT81 %0 %0 %0 %
Liquidation Bonus6 %0 %0 %0 %
Liquidation Protocol Fee10 %*** 10 %10 %10 %
Reserve Factor** 45 %10 %20 %20 %
Base Variable Borrow Rate0 %0 %0 %0 %
Variable Slope 1** 7 %6.5 %5.5 %5.5 %
Variable Slope 2** 300 %60 %80 %80 %
Uoptimal** 35 %90 %90 %90 %
Stable BorrowingDISABLEDDISABLEDDISABLEDDISABLED
FlashloanableENABLEDENABLEDENABLEDENABLED
Siloed BorrowingDISABLEDDISABLEDDISABLEDDISABLED
Borrowable in IsolationDISABLEDDISABLEDDISABLEDDISABLED
Oracle0xf112aF6F0A332B815fbEf3Ff932c057E570b62d30x736bF902680e68989886e9807CD7Db4B3E015d3C0x150bAe7Ce224555D39AfdBc6Cb4B8204E594E0220x45D270263BBee500CF8adcf2AbC0aC227097b036

* The risk parameters follows latest Chaos Labs recommendation.

** Deviation of risk params for weETH from original ARFQ due "0" is not a valid value for RESERVE_FACTOR, Uoptimal, Variable Slope 1, Variable Slope 2 and causes payload to fail due validation errors. The updates values are from Aave V3 Ethereum Mainnet market and this does NOT enable the token as borrowable.

*** Deviation of risk param "Liquidation Protocol Fee" for USDC, set to "10%" to keep constistency from the rest of tokens. This change does not affect due USDC token will not have collateral enabled.

References

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorummedium confidenceclaude-sonnet-5
Consistent

This proposal follows the standard Aave v3 governance payload pattern: a single governance action that calls execute() on a dedicated, pre-audited payload contract (AaveV3EthereumEtherFi_EtherFiEthereumActivation), which internally performs registry registration, asset listings, risk parameter configuration, role grants, and fee payment. The decoded calldata only exposes this single execute() call with no arguments, since all substantive logic lives inside the target contract's bytecode rather than in the governance calldata itself. This is expected and consistent with how Aave DAO proposals of this type are structured (payload contracts referenced, source-linked, and tested via the provided GitHub links). Because the calldata is opaque beyond the single execute() call, we cannot line-item verify each specific parameter (e.g., exact caps, LTV, oracle addresses) purely from the decoded action, but there is nothing in the calldata that contradicts the description, and no unexpected target address, additional transfers, or role grants outside what's described. The single action's target and function signature match the expected activation payload pattern used across similar Aave listing proposals. Given the opacity of the single delegatecall, confidence is medium rather than high, but no discrepancy is evident from what can be observed.

Generated by Kvorum
model: claude-sonnet-5
provider: anthropic
profile: anthropic-strong-v1
prompt: v1.0
generated: 2mo ago
Review the decoded actions ↗

04Actions

1 total
#0fallback()chain 0x1
Target
0xee5b…da36
Value
0 wei
Function
fallback()
Arguments
{}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total

No votes recorded yet.

07Forum

No forum thread is confidently linked to this proposal.