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The Aave community has decided to migrate the main AAVE liquidity pool from Balancer v1 to Balancer v2, opting for an 80/20 pool of AAVE and wstETH. The Safety Module update is ongoing to adapt to current market metrics, with parts ready for implementation and others under revision, aiming to incentivize GHO liquidity and protocol cover.
The discussion initiated by Llamaxyz revolves around the proposal to migrate the main AAVE liquidity pool from the obsolete Balancer v1 to Balancer v2, and the inclusion of Balancer Pool Tokens (BPT) in Aave's Safety Module (SM). The proposal presents four options for the new Balancer v2 liquidity pools: 80/20 AAVE/wETH, 80/20 AAVE/wstETH, 50/50 AAVE/wETH, and 50/50 AAVE/wstETH. The main considerations are the risk and yield for liquidity providers, and the exposure of the SM to the AAVE token1.
The discussion also touches on the systemic risk of using deposits in Aave as backstop for Aave. The focus for SM assets should be on liquidity and correlation to Aave success. BPTs with liquid assets (stables/ETH/wETH) are suggested to be very effective for the need. However, confidence in the availability of that liquidity is needed before the DAO should allocate the resources 2,3,4.
Bgdlabs provided technical context on the pending migration of 80/20 AAVE/WETH aBPT from Balancer v1 to Balancer v2, stating that it will be completed after the Safety Module 1.5 upgrade. They advised against changing the weight of the current ABPT to 50/50 due to potential friction for users and operational overhead. They also mentioned that they are confident they can include the "swap" from AAVE/WETH to AAVE/wstETH in the planned upgrade/migration, if maintaining the 80/20 distribution5.
After the Snapshot vote, Llamaxyz announced that the Aave DAO had elected to proceed with an 80/20 pool comprised of AAVE and wstETH11. Dydymoon explained that the Safety Module (SM) update is a complex topic and that the proposal is still being worked on to adapt to current market metrics. They also mentioned that the code supporting veBAL position has been implemented and can be deployed pending community feedback14.
In conclusion, the Aave community has decided to proceed with the migration of the main AAVE liquidity pool from Balancer v1 to Balancer v2 with an 80/20 pool comprised of AAVE and wstETH. The Safety Module update is still being worked on to adapt to current market metrics, with some parts ready for implementation while others are still being reworked. The goal of the StrategicAssetManager proposals is to incentivize GHO liquidity and protocol cover with the current budget14.
Posted 8 months ago
Last reply 3 months ago
Summary updated 2 months ago
Last updated 08/12 04:39