Add GHO on Aave Plasma and deploy GSM on Plasma.

Simple Summary

With the GHO lanes now activated on CCIP, this publication defines the launch parameters for GHO on Plasma, as well as the introduction of GSMs on Plasma.

Motivation

This publication presents the revised GHO parameter configuration for deploying the RemoteGSM and listing GHO on Aave Protocol. A joint collaboration program with Plasma, Maple Finance and Ethena, will be launched on Aave Protocol whilst separate and complimentary rewards programs will commence on Fluid and Balancer.

GHO Supply

Within the new syrupUSDT and GHO collateral eMode, users who:

• Supply syrupUSDT and GHO (50% syrupUSDT:50% GHO), with a cap of 50% for GHO eligible for rewards (if additional GHO is supplied, it won't be rewarded)
• Borrow USDT and complete at least one leverage loop
• Maintain a health factor of less than 2.0

Will receive GHO incentives (~3.50%) such that the Total Supply yield (Native + Incentives) exceeds the native syrupUSDT yield by approximately 50bps.

The above incentive strategies create GHO Supply on Aave Protocol. Sourcing the GHO is expected to at least partially flow through the remote GSM, which deposits USDT0 into Aave whereby the DAO earns the Supply yield.

GHO Demand

With strong GHO supply expected from the GHO incentives, GHO demand is created via the revision of eMode 2 to include GHO as a debt asset. eMode 2 is to offer sUSDe and USDe as collateral with USDT and GHO as debt, the GHO debt will receive a x5 Sats multiplier from the Ethena team that matches what is currently available on the Ethereum Core and Prime instances.

This is expected to stimulate Demand for GHO on Aave Protocol with GHO expected to be a lower cost alternative to USDT0 due to the Borrow Rate configuration (150bps less than USDT at Uoptimal) and additional Sat incentives acting to offset the cost of capital for leverage users.

Furthermore, additional eModes with Pendle PT assets are expected to provide sustained demand for GHO that reduces the reliance on GHO Incentive yield to attract GHO supply.

Fluid and Balancer

With support from the Aave Liquidity Committee (ALC) concentrated liquidity facilitating swaps will be incentivised on Fluid and Balancer in collaboration with each respective team and the Plasma team. Importantly, this stimulates demand for GHO on secondary markets outside of Aave Protocol and is expected to provide a net counter flow where users are expected to be net acquiring GHO.

Specification

This proposal has two parts that need to be executed in sequence. Part 1 will execute first, and then Part 2 can be executed. Part 2 will always revert until Part 1 is executed as it's dependant on it.

The table below illustrates the configured risk parameters for GHO

Parameter	Value
Isolation Mode	false
Borrowable	ENABLED
Collateral Enabled	false
Supply Cap (GHO)	50,000,000
Borrow Cap (GHO)	20,000,000
Debt Ceiling	USD 0
LTV	0 %
LT	0 %
Liquidation Bonus	0 %
Liquidation Protocol Fee	10 %
Reserve Factor	5 %
Base Variable Borrow Rate	1.25 %
Variable Slope 1	3.5 %
Variable Slope 2	16.5 %
Uoptimal	92 %
Flashloanable	ENABLED
Siloed Borrowing	DISABLED
Borrowable in Isolation	DISABLED
Oracle	0xb0e1c7830aA781362f79225559Aa068E6bDaF1d1

Additionally 0xac140648435d03f784879cd789130F22Ef588Fcd has been set as the emission admin for GHO and the corresponding aToken and vToken.

EModes

eMode Category 2

Parameter	sUSDe	USDe	USDT0	GHO
Collateral	Yes	Yes	No	No
Borrowable	No	No	Yes	Yes
Max LTV	90%	90%	-	-
Liquidation Threshold	92%	92%	-	-
Liquidation Bonus	4.0%	4.0%	-	-

eMode Category - Category 13

Parameter	PT-USDe April	USDT0	USDe	GHO
Collateral	Yes	No	No	No
Borrowable	No	Yes	Yes	Yes
Max LTV	Keep Current	-	-	-
Liquidation Threshold	Keep Current	-	-	-
Liquidation Bonus	Keep Current	-	-	-

eMode Category - Category 15

Parameter	PT-sUSDe April	USDT0	USDe	GHO
Collateral	Yes	No	No	No
Borrowable	No	Yes	Yes	Yes
Max LTV	Keep Current	-	-	-
Liquidation Threshold	Keep Current	-	-	-
Liquidation Bonus	Keep Current	-	-	-

eMode Category (new)

Parameter	GHO	USDT0
Collateral	Yes	No
Borrowable	No	Yes
Max LTV	94%	-
Liquidation Threshold	96%	-
Liquidation Bonus	2.0%	-

eMode Category (new)

Parameter	syrupUSDT	GHO
Collateral	Yes	No
Borrowable	No	Yes
Max LTV	90%	-
Liquidation Threshold	92%	-
Liquidation Bonus	4.0%	-

eMode Category (new)

Parameter	syrupUSDT	GHO	USDT0
Collateral	Yes	Yes	No
Borrowable	No	No	Yes
Max LTV	90%	90%	-
Liquidation Threshold	92%	92%	-
Liquidation Bonus	4.0%	4.0%	-

Facilitator & Bridging

Add a GhoDirectFacilitator on Ethereum to enable GHO issuance for Plasma.

• Mint Cap: 50M GHO
• Initial Mint: 50M GHO

As required, future Minting of GHO on Ethereum, to be supplied into the RemoteGSM on Plasma (or other networks) will be performed via direct submission of AIPs.

GhoReserve

Deploy GhoReserve on Plasma to hold bridged GHO. Configure stataUSDT RemoteGSM as an entity with a draw capacity of 50M GHO.

RemoteGSM Parameters (stataUSDT)

Parameter	Value
GHO Cap	50M
stataUSDT Exposure Cap	10M
Freeze Lower Bound	$0.990
Freeze Upper Bound	$1.010
Unfreeze Lower Bound	$0.995
Unfreeze Upper Bound	$1.005
Mint GHO Fee	0.00%
Burn GHO Fee	0.10%

In order to not allow arbitrageurs to move GHO immediately from Plasma to Mainnet, the exposure cap will initially be 10M and as Gho and USDT pegs stabilize, the risk council will gradually bring the exposure cap to 45M as originally planned.

The RiskCouncil will be set as a LIMIT_MANAGER on the GhoReserve to be able to update limits of the GSM.

GHO Steward Configuration

GhoAaveSteward

• updateGhoBorrowCap: ±100%
• updateGhoBorrowRate: ±5% on optimal usage ratio, base variable rates, slopes
• updateGhoSupplyCap: Up to +100%

GhoGsmSteward

• updateGsmExposureCap: ±100%
• updateGsmBuySellFees: ±0.5% per side (FixedFeeStrategy)

Bridging

Bridge 50M GHO from Mainnet to Plasma utilizing the newly set up AaveGhoCcipBridge.

References

• Implementation: AaveV3Ethereum_Part 1,AaveV3Ethereum_Part 2, AaveV3Plasma_Part 1, AaveV3Plasma_Part 2
• Tests: AaveV3Ethereum_Part 1, AaveV3Ethereum_Part 2, AaveV3Plasma_Part 1, AaveV3Plasma_Part 2
• Snapshot
• Discussion
• Audit

Copyright

Copyright and related rights waived via CC0.