What is this about?

This discussion revolves around a proposal by MarcZeller for the Aave DAO project, a leading liquidity protocol in Decentralized Finance, to receive a grant of 2M ARB¹. The grant is intended to facilitate the growth of Native Arbitrum GHO, the native Stablecoin Asset of the Aave protocol, into the Arbitrum ecosystem, and to foster synergies with the Arbitrum ecosystem for V3¹. The grant will also enable Aave to kickstart and grow GHO liquidity outside of the Ethereum mainnet and focus on the growth of the Aave V3 Arbitrum deployment¹. The proposal also includes a GHO gas subsidy program, which aims to make GHO a stablecoin free to send and transfer on Arbitrum¹.

How is the community reacting?

The community's reaction to the proposal is mixed. Some members, like ArbDefender and Matt_StableLab, have expressed concerns about the proposed 2.5M ARB GHO minting incentives and the compliance of the proposal with program rules^2,3. Others, like Peter and Meyaf320219, have raised concerns about larger protocols dominating the field and the focus of the proposal on generating liquidity and growth for AAVE's new stable, GHO, rather than bringing new value into the Arbitrum ecosystem^4,7. However, MarcZeller has responded to the feedback, acknowledging the need for reallocation of the proposed grant towards more established features of the Aave protocol and agreeing to provide more detailed KPIs and calculations to justify the grant size and distribution plan¹⁴.

Why this is positive?

The proposal, if successful, could foster growth and innovation within the Arbitrum ecosystem. It could boost liquidity, facilitate user onboarding, enable exploration of innovative use cases for decentralized stablecoins on Arbitrum, engage the community, and facilitate collaborations with other projects and protocols within the Arbitrum ecosystem¹. The grant will also allow Aave Arbitrum users to participate in governance in a trustless and gasless way, fostering a more inclusive DAO¹.

Why this is negative?

Some community members have raised concerns about the proposal. They argue that the grant size is too large, the proposal does not comply with program rules, and the focus on GHO could be harmful to the Arbitrum ecosystem^2,3,4,7. There are also concerns about GHO's peg issue and the use of incentives for GHO while it remains off peg^8,9. Furthermore, some members have criticized the Aave team for not responding to feedback and not updating their proposal, which remained in draft form past the deadline for changes¹³.