Aave Umbrella Activation

Simple Summary

This payload activates the Umbrella system, introducing new staking tokens tailored for Aave’s risk management needs, along with their reward and slashing configurations. It also includes adjustments to the legacy Safety Module to ensure a smooth transition and continued protocol coverage.

Motivation

The Umbrella project was developed to improve capital efficiency and enhance the protocol’s ability to cover potential shortfalls in the event of a bad debt. It represents a significant evolution of the existing Safety Module, offering broader coverage, improved fund utilization, and greater operational flexibility — ultimately serving as its full replacement.

Specification

For simplicity, the payload is divided into 3 parts.

1. Umbrella Activation
2. Legacy stk tokens adjustment
3. Robot activation

1. Umbrella Activation

This payload handles the deployment and configuration of the new Umbrella system for deficit elimination and staking.

Contract registration

• Registers the Umbrella contract in the POOL_ADDRESSES_PROVIDER.
  • Enables the Umbrella to be used for reserve deficit elimination.

Reserve Deficit Elimination

• Eliminates existing reserve deficits for the following assets: USDC, USDT, WETH and GHO.
  • Calculates current reserve deficits amounts.
  • Transfers the required amounts from the Collector to the Executor contract.
  • Executes deficit elimination using the transferred funds.

Stk Tokens Creation

• Creates stk tokens for the above assets:
  • stkwaUSDC.V1, stkwaUSDT.V1, stkwaWETH.V1 are backed by their respective stata tokens.
  • stkGHO.V1 is backed by the GHO underlying token.

Reward Configuration

• Sets up reward emissions for each stk token:
  • stkwaUSDC.V1 -> aUSDC, stkwaUSDT.V1 -> aUSDT, stkwaWETH.V1 -> aWETH
  • stkGHO.V1 -> GHO
  • For each:
    • maxEmissionPerSecond and targetLiquidity are configured using values from the governance discussion, check the summary table for more details
    • distributionEnd is set to 1 year from the execution.
    • rewardPayer is st to the Collector.

Slashing Configuration

• Sets up SlashingConfig for each stk token:
  • reserve: Corresponds to the base token (e.g., USDT for stkwaUSDT.V1, GHO for stkGHO.V1).
  • liquidationFee: Set to zero for all stk tokens.
  • deficitOffset: Values sourced from the governance discussion.
  • umbrellaStakeUnderlyingOracle:
    • For stata-based tokens: the stata token itself.
    • For GHO: a GHO oracle with a mocked price.

Role and Permission Management

• Grants REWARDS_ADMIN_ROLE in RewardsController to PERMISSIONED_PAYLOADS_CONTROLLER_EXECUTOR:
  • Allows the FinancialCommittee to limited modification of rewards without requiring governance proposals.
• Grants COVERAGE_MANAGER_ROLE to DEFICIT_OFFSET_CLINIC_STEWARD.
  • Allows the FinancialCommittee to eliminate deficitOffset using Collector funds directly.

Allowances

• Collector grants allowance to:
  • DEFICIT_OFFSET_CLINIC_STEWARD - for deficit offset amounts as per forum.
  • RewardsController - to fund reward emissions for 180 days post-execution.

Coverage of audit expenses

• Collector transfers 249_000 aUSDT to the BGD Labs to cover external security reviews of the entire Umbrella system.

Summary Table

Staked asset	Covered asset	Target Liquidity*	Max emission	Cooldown / Unstake window	Deficit offset
waUSDC	USDC	66_000_000	2_330_000	20 days / 2 days	100_000
waUSDT	USDT	104_000_000	3_670_000	20 days / 2 days	100_000
waWETH	WETH	25_000	550	20 days / 2 days	50
GHO	GHO	12_000_000	1_200_000	20 days / 2 days	100_000

• Target Liquidity is denominated in the contracts in wrapped aTokens, increasing over time in exchange rate. That means the Target Liquidity itself will grow slightly over time and rewards will need to be periodically adjusted. For the sake of simplicity, the number on the table is in equivalent terms of underlying (USDC, USDT, WETH), not in wrapped aTokens.

2. Legacy stk tokens adjustment

This payload introduces updates to the legacy Safety Module staking tokens to align with the activation of the new Umbrella system.

Emission Reductions

• Reduces (AAVE/day) reward emissions for the following tokens:
  • stkGHO: 100 -> 0
  • stkAAVE: 360 -> 315
  • stkBPT: 240 -> 216

Slashing Parameter Updates

• Lowers the maxSlashablePercentage for the legacy stk tokens:
  • stkGHO: 99.00% -> 0%
  • stkAAVE: 30.00% -> 20.00%
  • stkBPT: 30.00% -> 20.00%

stkGHO Deactivation

• Fully stops reward emissions for stkGho
• Reduces cooldown period to 0, enabling immediate unstaking

Summary Table

Staked asset	Rewards/day	Rewards/year	Slashing eligibility
AAVE	360 -> 315	131_400 -> 114_975	30% -> 20%
BPT	240 -> 216	87_600 -> 78_840	30% -> 20%
GHO	100 -> 0	36_500 -> 0	100% -> 0%

3. Robot activation

This payload handles the SlashingRobot and UmbrellaPPCRobot activation process.

• Withdraws 400 LINK from AaveV3 on Ethereum Network.
• Registers SlashingRobot and UmbrellaPPCRobot in the AAVE_CL_ROBOT_OPERATOR.
  • Sets gasLimit to 5_000_000.
  • Funds with all tokens withdrawn.

Audit Summary of the Aave Umbrella Contracts

The new contracts of the Aave Umbrella system were audited by four independent auditors: MixBytes, Stermi, Certora, and Ackee. The audited and deployed version of the contracts is publicly accessible at the following link: https://github.com/aave-dao/aave-umbrella/tree/62f3850816b257087e92f41a7f37a698f00fa96e.

Subsequent changes made in this GitHub repository (aave-dao/aave-umbrella) pertain either to auxiliary contracts that do not affect the core functionality of the Umbrella system or to interface improvements aimed at enhancing integration with external systems. These updates did not introduce any changes to the deployed core contracts.

The audit reports provided by each auditor can be found at the following links:

• MixBytes
• Stermi
• Certora
• Ackee

References

• Implementation: AaveV3Ethereum_UmbrellaActivation, AaveV3Ethereum_SafetyModuleRewardsDecrease, AaveV3Ethereum_RobotActivation
• Tests: AaveV3Ethereum_UmbrellaActivation, AaveV3Ethereum_SafetyModuleRewardsDecrease, AaveV3Ethereum_RobotActivation
• Snapshot
• Discussion

Copyright

Copyright and related rights waived via CC0.