Adding BAL on AAVE
01Summary
Proposal to add BAL (Balancer governance token) to AAVE V2 lending markets, enabling users to borrow and lend BAL on Aave. BAL has $230M market cap, is traded on major exchanges, and has been audited by Trail of Bits, Consensys Diligence, and OpenZeppelin. Risk parameters set LTV at 55% and liquidation threshold at 60%.
- Type
- protocol addition
Key changes
- Add BAL token to AAVE V2 lending market with LTV of 55% and liquidation threshold of 60%(high)
- Enable BAL borrowing and lending on Aave with liquidation bonus of 10% and reserve factor of 20%(high)
- Set variable interest rate model with UOptimal at 45%, R_0 at 0%, R_s1 at 7%, and R_s2 at 300%(medium)
Notable concerns
- BAL smart contract risk rated B- due to potential inflation from liquidity mining distribution
- BAL market risk rated C+ indicating significant volatility despite being traded on major exchanges
- BAL counterparty risk rated B due to permissionless nature of Balancer DEX
Generated by Kvorum
02Description
Simple Summary
BAL is the governance token of Balancer, a programmable liquidity and asset managment protocol with over $800M in TVL according to DeFi Pulse.
Abstract
Add BAL to the AAVE V2 market.
Balancer is a DEX that uses a constant function market maker formula to allow liquidity pools with multiple tokens, custom allocations and fees. Smart pools in Balancer can be used for programmable liquidity.
Traders can swap between any of the tokens listed on Balancer in exchange for a swap fee (paid to liquidity providers) and slippage based upon the relative trade size.
BAL is the governance token of the Balancer exchange, entitling holders (including those providing BAL liquidity on Balancer) to vote on proposals. BAL also receives preferential treatment in the Balancer exchange liquidity mining program.
Balancer is responsible for the creation of Snapshot, and currently leading a number of governance intiatives to reward active contributions to the protocol.
Motivation
As Balancer gears up for the launch of Balancer V2, composability becomes key for the Balancer ecosystem.
At the time of writing, BAL has a market cap of $230M.
Apart from the BAL liquidity on Balancer, BAL is also listed on FTX, Coinbase, Binance, Gemini and other centralized exchanges.
Adding BAL to Aave will be the first major lending/borrowing market for the asset, and one that sets precedent for future exploration of Balancer Pool Token (BPT) markets similar to Aave V1 Uniswap Markets.
Aave leverages Balancer for it's Safety Module, meaning this partnership further cements the relationship between the two protocols.
"The advantage of using Balancer against other AMM solutions is clear when we factor in the possibility of dynamically adjusting the weighting towards AAVE. This allows for the creation of a market and the provision of liquidity whilst maintaining exposure to AAVE. Holding AAVE/ETH liquidity with uneven weights is very close to simply holding AAVE, with the benefits of earning trading fees on top of it."
Benefits for Aave
Balancer has an increasingly active community which would bring more users and liquidity to Aave.
BAL earns native rewards through liquidity mining, currently yielding upwards of 80%+ APY with limited impermanent loss. This has generated strong borrowing demand for BAL on CREAM, with deposit rates often above 10%.
With deposit rates so high, it becomes super cost effective for people to borrow funds with BAL as collateral, often times with an effective negative borrowing rate!
Specification
BAL will continue to see increased governance activity in the coming months.
Adding BAL to the Aave V2 markets will provide strong borrowing demand, generating protocol fees and allowing for further governance participation.
Rationale
Balancer and Aave are natural partners. Aave leverages Balancer for it's Safety Module and it only seems natural that BAL should be listed on Aave given the depth of the AAVE liquidity Balancer today.
This proposal opens design space for future lending use-cases, both on Balancer's end and on Aave's for more niche specific liqudity pool markets.
Additional Resources
Whitepaper - https://balancer.finance/whitepaper 1
Website - https://balancer.finance 1
Twitter - https://twitter.com/BalancerLabs
Blog - https://balancer.finance/blog-feed
Documentation - https://docs.balancer.finance
Source Code - https://github.com/balancer-labs 2
BAL Token Contract - https://etherscan.io/address/0xba100000625a3754423978a60c9317c58a424e3d#code 1
Audits/Security Reviews
Trail of Bits, Conesnsys Dilligence and Open Zeppelin.
AAVE Community x BAL Risk Assesment
BAL Smart contract Risk: B-
Since it's launch in June BAL has reached half a million transactions driven by liquidity mining distribution program which may lead to inflation. The smart contract has been well battle tested, audited twice and has a good test coverage.
BAL Counterparty Risk: B
Balancer is a permissionless DEX with a large community of BAL holders that vote on proposals. Anyone can create a custom Balancer Pool.
BAL Market Risk: C +
The BAL token has experience less volatility than the rest of the DeFi market since its inception but remains quite volatile. The token is traded on the top centralized exchanges with good volume.
Risk Parameters
- LTV 55%
- Liquidation Threshold 60%
- Liquidation Bonus 10%
- Reserve Factor 20%
Variable Interest Rate Model ~ Collaterals
- UOptimal 45%
- R_0 0%
- R_s1 7%
- R_s2 300%
References
Coingecko
Pool management - Balancer 1
Pools Vision 1
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal describes listing BAL on Aave V2 with specific risk parameters: LTV 55%, Liquidation Threshold 60%, Liquidation Bonus 10%, and Reserve Factor 20%. The single decoded on-chain action calls the standard Aave asset-listing execute() function with the BAL token address and numeric parameters 5500, 6000, 11000, and 2000 respectively. Converting these basis-point values confirms an exact match: 5500bps=55% LTV, 6000bps=60% liquidation threshold, 11000 (interpreted as 100%+10% bonus)=10% liquidation bonus, and 2000bps=20% reserve factor. The token decimals argument (18) also matches BAL's actual decimal count. The interest rate curve parameters (UOptimal, R0, R_s1, R_s2) described in the proposal are not directly passed as arguments here, which is expected since they are implemented in a separately deployed interest rate strategy contract referenced by address rather than passed as raw parameters — this is standard practice and not a discrepancy. The boolean flags (collateral enabled, stable borrow disabled, borrowing enabled) are routine listing parameters consistent with a standard asset addition and are not contradicted by the description. No unexplained transfers, role grants, or target mismatches are present. Overall, the calldata faithfully implements exactly what the description claims, with no material or misleading differences found. This is a single, well-scoped listing action matching a well-detailed proposal.
Generated by Kvorum
04Actions
- Target
- 0xe775…4473
- Value
- 0 wei
- Function
- execute(address,address,address,address,address,uint256,uint256,uint256,uint256,uint8,bool,bool,bool)
- Arguments
{ "0": "0xba100000625a3754423978a60c9317c58a424e3D", "1": "0xAbA5787d3cd9cEE7F3eaAB451C5BAF1b3AaFE502", "2": "0x58571484BD57a87E359e46F82dFa9D13087b24a0", "3": "0xe1b4B5A069bbBDDaA8de93F67545dcEAB018e88E", "4": "0xfC0Eace19AA7498e0f36eF1607D282a8d6debbDd", "5": "5500", "6": "6000", "7": "11000", "8": "2000", "9": "18", "10": true, "11": false, "12": true }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- Proposal: Add support for BAL ↗discourse · high confidence
Arguments for
- Balancer has an active, large community and significant TVL that would bring more users and liquidity to Aave.— mubaris, monet-supply, coopahtroopa
- BAL's high liquidity mining yields on Balancer create strong borrowing demand and favorable/negative effective borrowing rates when used as collateral on lending markets like CREAM.— mubaris
- Aave and Balancer already have a strong working relationship since Balancer's pool tech is being used for Aave's Safety Module, making a two-way listing sensible.— coopahtroopa, Alex_BertoG
- BAL is comparable to already-listed assets like UNI and KNC in terms of risk profile and LTV, supporting a similar listing treatment.— coopahtroopa
- The BAL smart contract is well battle-tested, audited twice, and has good test coverage, indicating acceptable smart contract risk.— Alex_BertoG
- General community enthusiasm and support for adding BAL as a good project with a solid team.— 0xLucas, getty, depressedape, oaksprout, Dc_aave
Arguments against
None surfaced.
Unresolved concerns
- BAL's liquidity mining distribution program may lead to token inflation, a risk factor not fully resolved in discussion.— Alex_BertoG
- BAL market risk is rated only 'C+' due to volatility relative to the rest of DeFi, though this was not further debated.— Alex_BertoG
Notable participants
- mubarisCo-proposer who authored the initial proposal detailing Balancer/BAL background and benefits for Aave.
- monet-supplyCo-proposer credited alongside mubaris for bringing the proposal together.
- coopahtroopaActive supporter who compared BAL's risk profile to existing listed assets and highlighted the Aave-Balancer relationship.
- Alex_BertoGProvided detailed risk assessment including smart contract, counterparty, and market risk ratings plus proposed risk parameters.
- staniAnnounced the proposal going live for voting.
- gettyVoiced support and stated intent to vote yes.
- oaksproutExpressed enthusiasm and support for the proposal.
- Dc_aaveVoiced strong support praising the Balancer project and team.
Generated by Kvorum
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