AmendSafetyModuleAAVEEmissions
01Summary
Proposal to reduce AAVE Safety Module emissions by 30% (from 1,100 to 770 AAVE/day) and implement a 90-day SM emission cycle to improve capital efficiency while broader SM upgrades are being developed. Expected APR impact: stkAAVE from 6.87% to 4.81%, B-80AAVE-20wETH from 14.35% to 10.05%.
- Type
- parameter change
Key changes
- Reduce AAVE emissions to stkAAVE from 550 to 385 AAVE/day(high)
- Reduce AAVE emissions to B-80AAVE-20wETH from 550 to 385 AAVE/day(high)
- Implement 90-day SM emission cycle schedule(medium)
- Expected APR reduction for stkAAVE holders from 6.87% to 4.81%(high)
- Expected yield reduction for B-80AAVE-20wETH deposits from 14.35% to 10.05%(high)
Notable concerns
- Reduction in deposit yields may impact Safety Module TVL and participation
- Future Balancer v1 to v2 migration presents opportunity for further emission adjustments
- This is a more conservative reduction compared to Llama Part IV proposal (75% reduction) and Xenophon Labs recommendation (80 AAVE/day reduction with 60% slashing increase)
Generated by Kvorum
02Description
Simple Summary
This publication proposes reducing AAVE (Safety Incentives) distributions to the Safety Module (SM) by 30% and introducing a 90-day SM emission cycle.
The SM serves as the Aave Protocol’s self-protection smart contract. The Aave Protocol distributes 1,100 AAVE daily, split evenly across AAVE and B-80AAVE-20wETH deposits.
Future proposals shall discuss the composition and aim to improve the overall capital efficiency of the SM. However, this publication intends to reduce AAVE emissions in the immediate future, saving the DAO valuable AAVE emissions while the broader SM upgrade is being advanced. It is widely accepted within the community that Aave DAO is overpaying for AAVE and B-80BAL-20wETH deposits.
This publication proposes reducing AAVE emissions by ~30%. The revised AAVE emission is to be reduced from 1,100 AAVE/day to 770 AAVE/day. This represents a 330 AAVE/day reduction. The APR for stkAAVE holders is expected to reduce from 6.87% to 4.81%. Similarly, for the B-80BAL-20wETH deposits, yield is expected to fall from 14.35% to 10.05%.
Please note that the 80AAVE/20wETH Balancer v1 pool is to be migrated to Balancer v2 in the future. This will present the community with an opportunity to further revise the AAVE emissions. It may also occur at a time when the DAO has vlAURA and/or veBAL at its disposal.
For context, the Llama Part IV SM Upgrade suggests reducing the AAVE emission to stkAAVE holders by 75%. This is because slashing for stkAAVE is to be reduced, additional assets are to be added to the SM, and the emissions are to be redirected to those newly added assets. Since this proposal was published, stkAAVE has also gained the utility of discounted GHO borrowing rates.
Similarly, Xenophon Labs recommended doubling the slashing percentage from 30% to 60% on the stkAAVE pool and lowering emissions by 80 AAVE/day, from 550 to 470. While this publication does not propose amending the slashing rate, the reduction in AAVE emissions is about double.
Specification
The implementation for this proposal will be prepared by ACI. The table below shows the current and proposed daily AAVE Emissions.
| Collateral | Current Emissions | Proposed Emissions |
|---|---|---|
| AAVE | 550 | 385 |
| B-80AAVE-20wETH | 550 | 385 |
Transition to a 90-day period SM Emission schedule.
A comparison between Xenophon Labs’ proposal and this proposal for stkAAVE holders is shown below:
| TVL | Slashing Rate | Protection | AAVE/day | AAVE Price | Annual Spend | Annual Cost per $ of Coverage | Deposit Yield |
|---|---|---|---|---|---|---|---|
| $175.0M | 30% | 52.5M | 550 | $60.00 | $12.045M | $0.23 | 6.88% |
| $175.0M | 60% | 105.0M | 470 | $60.00 | $10.293M | $0.10 | 5.88% |
| $175.0M | 30% | 52.5M | 385 | $60.00 | $8.431M | $0.16 | 4.82% |
References
- Implementation: AaveV3Ethereum
- Tests: AaveV3Ethereum
- Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
A calldata-vs-description analysis is not generated yet. Review the decoded actions →
04Actions
- Target
- 0x9aee…2bc7
- Value
- 0 wei
- Function
- forwardPayloadForExecution((uint256,uint8,address,uint40))
- Arguments
{ "0": [ "1", "1", "0xdAbad81aF85554E9ae636395611C58F7eC1aAEc5", "12" ] }- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 320x329c…3ed4 | For | 116.5K | 24.63% | — | 3y ago |
| 130x13bd…8548 | For | 61.3K | 12.96% | — | 3y ago |
| 230x2331…7e73 | For | 60K | 12.68% | — | 3y ago |
| 2C0x2cc1…4df1 | For | 43.7K | 9.23% | — | 3y ago |
| B90xb933…8dd1 | For | 42.4K | 8.96% | — | 3y ago |
| EA0xea17…6676 | For | 38.8K | 8.20% | — | 3y ago |
| EZezr3al.eth0x8659…7d0e | For | 38K | 8.04% | — | 3y ago |
| 570x57ab…2922 | For | 26.2K | 5.53% | — | 3y ago |
| 870x8787…ea52 | For | 21.1K | 4.46% | — | 3y ago |
| E40xe459…e666 | For | 20K | 4.23% | — | 3y ago |
| 180x1855…98ba | For | 5K | 1.07% | — | 3y ago |
| DF0xdf06…4977 | For | 27.3 | 0.01% | — | 3y ago |
| B00xb056…42a9 | For | 5.9 | 0.00% | — | 3y ago |
| 570x5762…a752 | For | 1 | 0.00% | — | 3y ago |
| 930x93d2…dd57 | For | 0.1 | 0.00% | — | 3y ago |
| 210x214b…f018 | For | 0.1 | 0.00% | — | 3y ago |
| 3F0x3f36…a5d1 | For | 0 | 0.00% | — | 3y ago |
| 540x542e…c921 | For | 0 | 0.00% | — | 3y ago |
| 250x2546…cfec | For | 0 | 0.00% | — | 3y ago |
| 7B0x7b53…87e2 | For | 0 | 0.00% | — | 3y ago |
| E60xe635…1773 | For | 0 | 0.00% | — | 3y ago |
07Forum
No forum thread is confidently linked to this proposal.
08Similar proposals
- aaveexecutedAmendSafetyModuleAAVEEmissions99%
- aaveexecutedReduce Safety Module Emissions88%
- aaveexecutedSafety Module Emission Update88%
- aaveexecutedAmend Safety Module Emissions86%
- aaveexecutedLower stkABPT Emissions86%
- aaveexecuted[ARFC] Safety Module & Umbrella Emission Update85%
- aaveexecutedSafety Module stkAAVE - Re-enable Rewards84%
- aaveexecutedstkAAVE Emissions Update82%
- aaveexecutedExtend stkAAVE Emissions82%
- aaveexecutedExtend stkAAVE Emissions81%