The Aave Chan Initiative (ACI), spearheaded by MarcZeller, put forth a proposal for the integration of AgEUR, a decentralized, overcollateralized stablecoin created by the Angle protocol, into Aave Arbitrum V3 as a non-collateral asset¹. The proposal was driven by AgEUR's robustness and efficiency as a leading EUR-pegged decentralized stablecoin, and the ACI's advocacy for stablecoin diversity¹. The proposal also detailed specific risk parameters and contract details for AgEUR¹.

The community largely welcomed the proposal, with users like Sogipec and Gabuzo voicing their support ^2,3. Sogipec, who contributes to the Angle Protocol, underscored the recent expansion of agEUR on Arbitrum and the potential advantages of the integration, such as enabling borrowers to short agEUR or gain leverage on ETHEUR².

However, despite the initial backing, the proposal did not progress to the AIP stage due to a depeg of agEUR following an exploit of their D3M module into Euler⁵. MarcZeller clarified that even if the proposal had been approved prior to the exploit, the 0 LTV nature of the onboarding would not have resulted in Aave excess debt⁵. This incident underscores the importance of robust security measures in the development and implementation of decentralized financial protocols.