Llama Contract Update

# Llama Month 12 Update ## Summary We have completed our 12 month term with Aave DAO. This post covers the work done. In addition to our scope, we have developed evergreen publicly-available tools to serve the needs of Aave and future contributors: [Aave Swapper](https://etherscan.io/address/0x3ea64b1C0194524b48F9118462C8E9cd61a243c7#code), [StrategicAssetManager](https://etherscan.io/address/0x6235d8071dbee0a20e7d6ebb214f65d913c7ac1b#code), and [Polygon Bridge tool](https://etherscan.io/address/0xc928002904Ec475663A83063D492EA2aE09EbDA1#code). We are grateful for the opportunity to contribute to Aave. ## Deliverables ### Treasury Management & Analytics | Task | Work Completed | | -------- | -------- | | **Strategic Partnerships** Work with other communities to determine if they are a good match for the Aave community and Aave’s vision/future intentions. Coordinate and deploy all on-chain proposals across necessary platforms. | - [Whitelist Balancer’s Liquidity Mining Claim](https://app.aave.com/governance/proposal/109/) - [Deployed 100k BAL acquisition bonding curve](https://app.aave.com/governance/proposal/115/) - [Set LDO, stMATIC, MaticX and SD Emission_Admin for Polygon v3 Liquidity Pool](https://app.aave.com/governance/proposal/130/) - [LDO - Reward Controller Access Request](https://app.aave.com/governance/proposal/157) - [OP Emission_Admin for Optimism v3 Liquidity Pool](https://app.aave.com/governance/proposal/183) - [AIP-267: Treasury Management - Acquire B-80BAL-20WETH](https://app.aave.com/governance/proposal/267/). See an [analysis of this acquisition](https://governance.aave.com/t/analysis-of-b-80bal-20weth-acquisition/14005). - Developed Strategic Asset Manager to manage Aave's strategic assets like veBAL. [Code](https://github.com/bgd-labs/aave-proposals/pull/208/files#diff-f1891d84ff4d3aeafd468274018d2da88e73f22ef5be86ab207b2ba39912cbd6R60), [forum discussion](https://governance.aave.com/t/update-on-aave-swapper-and-strategic-asset-manager-contracts/14522).| | **Earning Yield** Deploy a portion of the DAO’s funds across diversified strategies of varying risk profiles to earn yield across many networks while maintaining sufficient stablecoin runway and optimizing risk exposure.| -[[ARC] Polygon and Avalanche v2 -> v3 Treasury Migration](https://governance.aave.com/t/arc-polygon-and-avalanche-v2-v3-treasury-migration/10661) (was ultimately incorporated in another ARC from BGD Labs) - [AIP-144: Ethereum v2 Collector Contract Consolidation](https://app.aave.com/governance/proposal/144/) - [AIP-261: Treasury Management - Acquire wstETH & rETH](https://app.aave.com/governance/proposal/261/) - [AIP-282: Acquire more aUSDC on Aave Ethereum Collector](https://app.aave.com/governance/proposal/282/) - [AIP-302: Swap assets to aUSDC](https://app.aave.com/governance/proposal/302/)| | **Grow Aave’s Revenue** Position Aave’s assets to bolster revenue growth. Utilize assets from the Reserve Factor to unlock and promote the growth of Aave markets and revenue. | - [AIP-131: Aave v2 ETH Interest Rate Curve Update](https://app.aave.com/governance/proposal/131/) -[[ARFC] Create eMode Categories for Aave v3 on Ethereum](https://governance.aave.com/t/arfc-create-emode-categories-for-aave-v3-on-ethereum/10981) - [AIP-150: Aave v3 Polygon wMATIC Interest Rate Upgrade](https://app.aave.com/governance/proposal/150/) - [AIP-151: BAL Interest Rate Curve Upgrades](https://app.aave.com/governance/proposal/151) - [AIP-158: Ethereum v2 - wETH Interest Rate Curve Upgrade](https://app.aave.com/governance/proposal/158) - [AIP-163: Add wstETH to Arbitrum Aave v3](https://app.aave.com/governance/proposal/163) - [AIP-167: MaticX Risk Parameter & Interest Rate Upgrade](https://app.aave.com/governance/proposal/167/) - [AIP-168:Add CRV to Ethereum v3](https://app.aave.com/governance/proposal/168) -[AIP-172: stMATIC SupplyCap Increase Polygon v3](https://app.aave.com/governance/proposal/172) - [AIP-175:CRV Interest Rate Curve Upgrade](https://app.aave.com/governance/proposal/175) - [AIP-182:MaticX Supply Cap Increase Polygon v3](https://app.aave.com/governance/proposal/182) - [AIP-197: Add UNI, MKR, SNX & BAL to Ethereum V3](https://app.aave.com/governance/proposal/197/) - [AIP-199: Increase wMATIC Supply Cap and BAL Borrow Cap](https://app.aave.com/governance/proposal/199/) - [AIP-201: Add LDO to Ethereum Aave v3](https://app.aave.com/governance/proposal/201/) - [AIP-209: Increase SupplyCap stMATIC Polygon & wETH Arbitrum](https://app.aave.com/governance/proposal/?proposalId=209) -[AIP-210: Add wstETH to Polygon Aave V3](https://app.aave.com/governance/proposal/?proposalId=210) -[AIP-211: BAL Interest Rate Upgrade](https://app.aave.com/governance/proposal/?proposalId=211) -[AIP-225: LST Supply Cap Increase Polygon & Arbitrum](https://app.aave.com/governance/proposal/225) - [AIP-229: MaticX Supply Cap Increase Polygon v3](https://app.aave.com/governance/proposal/229) - [AIP-231: wMATIC Supply & Borrow Cap Increase Polygon v3](https://app.aave.com/governance/proposal/231) - [AIP-241: Polygon Supply Cap Update](https://app.aave.com/governance/proposal/241/) - [AIP-242: Add rETH to Arbitrum v3](https://app.aave.com/governance/proposal/242/) -[AIP-243: Add LUSD to Arbitrum Aave V3](https://app.aave.com/governance/proposal/243/) - [AIP-257: Optimism - Create ETH eMode Category](https://app.aave.com/governance/proposal/?proposalId=257) -[AIP-257: Optimism - Create ETH eMode Category](https://app.aave.com/governance/proposal/257/) - [AIP-275: Add rETH Aave v3 Optimism](https://app.aave.com/governance/proposal/275/) - [AIP-278: MaticX Polygon Supply Cap Update](https://app.aave.com/governance/proposal/278/) - Enabled incentives on Polygon V3 by supporting Polygon Foundation, Stader Labs, and Lido DAO.| | **Hedging** Explore and implement ways to provide downside protection to the Ecosystem Reserve.| Llama explored various hedging options; given market prices and hedging costs, hedging the Ecosystem Reserve would have been uneconomical.| | **Claim Revenue to Treasury for Aave V3** Make periodic calls to claim Aave V3 revenue to Aave’s treasury.| Set up off-chain infrastructure to automatically and dynamically claim all revenue to the treasury for Aave V3 on Polygon, Optimism, Arbitrum, Avalanche, Metis, and Base on a weekly basis (i.e every Thursday). Some example transactions across the different networks: 1. [Polygon](https://polygonscan.com/tx/0x968efcb3aa4835567029241f41b280b914c2d54e9bcf39d8e94c6296c7ec1f00) 2. [Optimism](https://optimistic.etherscan.io/tx/0xc25b2de87d707a0bb0e6dccdeb9b4750637ab854bd6e70e29dfc3ce355446125) 3. [Arbitrum](https://arbiscan.io/tx/0xca9ede257f841f8c997aaa1c04f0263068d283478709874fc8267ea3f3cdb2bd) 4. [Avalanche](https://snowtrace.io/tx/0x4341a46289d14c8a9ffa8bcc3fffbb5acd7db34da6036be6d35c6daec46503ea)| | **Improve Capital Efficiency of the Safety Module (SM)** Create various optimizations for the SM to ensure that it functions with Aave’s increased TVL.|- [[Discussion] Safety Module](https://governance.aave.com/t/discussion-safety-module/12029) - Published 6 part Temp Check with proposed upgrades to the Safety Module: [1](https://governance.aave.com/t/temp-check-safety-module-update-part-i-migrate-aave-weth-balancer-v1-pool-to-balancer-v2/12748), [2](https://governance.aave.com/t/temp-check-safety-module-upgrade-part-ii-asset-diversity-sm-categories-slashing-updates/12749), [3](https://governance.aave.com/t/temp-check-safety-module-upgrade-part-iii-enable-gauges-on-bpt-in-safety-module-smbpt/12750), [4](https://governance.aave.com/t/temp-check-safety-module-upgrade-part-iv-incentives-management-upgrade/12751), [5](https://governance.aave.com/t/temp-check-safety-module-upgrade-part-v-vetoken-holding-management-framework/12752), [6](https://governance.aave.com/t/temp-check-safety-module-upgrade-part-vi-future-considerations/12753)| | **Safety Module Performance** Provide detailed analysis of the SM’s historical and current performance relative to TVL, market conditions, and market volatility.|- Published [Safety Module dashboard](https://community.llama.xyz/aave/safety-module) on [community.llama.xyz](https://community.llama.xyz).| | **Shortfall Event Analysis** Model the effect of a shortfall event on the SM’s backstop and AAVE token price.|Published [Shortfall Analysis dashboard](https://app.hex.tech/6f57775d-7717-4ae7-8924-21da06597348/app/bebe1927-b799-41c8-84b9-8d781ec08b50/latest)| | **Runway Analysis** Provide analysis that will shape investment, amongst other, decisions across the DAO.| - [Published initial Runway Analysis](https://governance.aave.com/t/aave-runway-analysis-november-2022/11027) in December '22 - Published [live runway analysis](https://community.llama.xyz/aave/runway) on community.llama.xyz| | **Develop a Data Warehouse for Aave** Develop a live, customized, and transparent financial reporting backend solution for Aave.| Developed a data warehouse that combines and transforms on-chain data from numerous networks with off-chain data sources to provide a comprehensive base layer of Aave blockchain data that can be used to build real-time analytics dashboards. This code has been open sourced and is [publicly available on Github](https://github.com/llamaxyz/aave-etl).| | **Accounting Reports** Publish financial reporting statements enabled by the data warehouse.|- [October 2022](https://llama.xyz/reports/aave/october-2022-financials.pdf) - [November 2022](https://llama.xyz/reports/aave/november-2022-financials.pdf) - [December 2022](https://llama.xyz/reports/aave/q4-2022-financial-report.pdf) - [January 2023](https://llama.xyz/reports/aave/january-2023-financials.pdf) - [February 2023](https://llama.xyz/reports/aave/february-2023-financials.pdf) - [March 2023](https://llama.xyz/reports/aave/q1-2023-financial-report.pdf) - [April 2023](https://llama.xyz/reports/aave/april-2023-financials.pdf) - [May 2023](https://llama.xyz/reports/aave/may-2023-financials.pdf) - [June 2023](https://llama.xyz/reports/aave/june-2023-financials.pdf) - [July 2023](https://llama.xyz/reports/aave/july-2023-financials.pdf) - [August 2023](https://llama.xyz/reports/aave/august-2023-financials.pdf) - [September 2023](https://llama.xyz/reports/aave/september-2023-financials.pdf)| | **Investment Performance Reporting** Provide visibility into each investment strategy, its performance, and associated risks.|- Published [publicly available dashboard](https://app.hex.tech/6f57775d-7717-4ae7-8924-21da06597348/app/f6ac8e49-0192-4352-8776-b703d5117084/latest)| | **Risk Modeling for DAO Investments** Model various risk scenarios to ensure the DAO has exit strategies during periods of market turbulence.|- Published [publicly available dashboard](https://app.hex.tech/6f57775d-7717-4ae7-8924-21da06597348/app/f6ac8e49-0192-4352-8776-b703d5117084/latest)| ### Growth | Task | Work Completed | | -------- | -------- | |**ARC Market Liquidity Mining Module** Upgrade the Aave ARC market to include a liquidity mining module.|ARC Market has very little TVL, meaning it no longer made sense to add a liquidity mining module.| |**New Collateral Types**|- Published [ARC for ERC-4626 collateral type](https://governance.aave.com/t/arc-erc4626-strategies-as-productive-collateral/10337). After discussion with other community members, it was determined that it made most sense for Aave Companies to pursue [their implementation of this productive collateral proposal](https://governance.aave.com/t/arc-staked-atokens-a-new-aave-primitive-exploring-vote-escrow-economies/10406).| |**DeFi Integrations** Bolster the adoption of Aave’s tokens across DeFi by supporting initiatives that build on top of Aave markets or integrations that create TVL for Aave markets.|- Supported CIAN as they built a [MaticX / wMATIC strategy for Aave V3 (Polygon)](https://dapp.cian.app/strategy/matic/create). - Made Balancer gauge proposals to support Aave’s growth. Ex: ([1](https://forum.balancer.fi/t/bip-247-enable-wsteth-bb-a-weth-gauge-polygon/4606), [2](https://forum.balancer.fi/t/bip-246-enable-wsteth-bb-a-weth-gauge-arbitrum/4608), [3](https://forum.balancer.fi/t/bip-240-enable-reth-bb-a-weth-gauge-arbitrum/4616), [4](https://forum.balancer.fi/t/bip-243-enable-cbeth-bb-a-weth-gauge-ethereum/4623), [5](https://forum.balancer.fi/t/bip-xxx-enable-wsteth-bb-a-weth-gauge-optimism/4626), [6](https://forum.balancer.fi/t/bip-245-enable-bb-a-usd-gauge-and-kill-bbamusd-gauge-polygon/4640), [7](https://forum.balancer.fi/t/bip-244-enable-bb-a-usd-gauge-arbitrum/4641)) - Created [proposal on Sturdy Finance](https://gov.sturdy.finance/t/sip-003-new-collateral-boosted-aave-v3-bb-a-usd/52) to onboard the new boosted Aave V3 BB-A-USD as collateral.| |**Metagovernance** Enable AAVE and stkAAVE holders to participate in metagovernance by voting on proposals within other communities in which Aave DAO holds tokens.|- Developed [StrategicAssetManager](https://governance.aave.com/t/temp-check-treasury-management-introducing-strategicassetmanager/13916) to enable Aave DAO to use its strategic assets and vote in other DAOs' proposals| |**Asset Listing Risk Assessments** Support asset listings by providing a qualitative risk analysis report on the forum that details the initial risk parameters. Adopt any risk parameters suggested by Gauntlet, provided borrowing is enabled at launch.|- [Badger](https://governance.aave.com/t/arc-add-support-for-badger-on-aave-v3/10377/15)| ## Additional Work Throughout our 12-month engagement, Llama undertook projects that would benefit the DAO, though they weren't explicitly within our scope. | Task | Notes | | -------- | -------- | |[aFEI Holding Update](https://app.aave.com/governance/proposal/105/)|Allowed for unwinding Aave’s aFEI holding for DAI and depositing the DAI into the Aave v2 Ethereum Pool DAI Reserve.| |[FEI Reserve Factor Update](https://app.aave.com/governance/proposal/110/)|The previous configuration of FEI’s Reserve Factor at 100% did not accrue variable borrow debt and did not redirect the Reserve Factor fees to the Collector smart contract.| |Executed multiple swaps of aFEI to aDAI in the Aave V2 Collector through the [swapper contract](https://etherscan.io/address/0x9A953AC1090C7014D00FD205D89c6BA1C219Af8b#code) that was set up as part of [AIP-105](https://app.aave.com/governance/proposal/105/)|| |Co-authored an [ARC](https://governance.aave.com/t/arc-repay-excess-debt-in-crv-market-for-aave-v2-eth/10779) with Gauntlet to propose a path forward for covering $1.6m in excess debt from CRV markets.|Roughly ~$280k of stkAAVE will be used from Gauntlet’s insolvency fund. Llama and Gauntlet have recommended that the rest of the excess debt be repaid using Aave’s Collector Contract. We [published more details](https://governance.aave.com/t/arc-repay-excess-debt-in-crv-market-for-aave-v2-eth/10779/15) on how we propose funding the Excess Debt from the Collector Contract.| |Worked with Chaos Labs to propose [AIP-125](https://app.aave.com/governance/proposal/125), which allows users to deposit assets across the majority of reserves rather than freezing pools as outlined in AIP-121.|| |Published [ARC](https://governance.aave.com/t/arfc-aave-dao-policy-change-halt-listings-on-all-aave-v1-v2-non-permissioned-deployments/10831) along with Gauntlet, Chaos Labs, 3SE Holdings, and @ItsFreeRealEstate to halt listings on Aave V1 and Aave V2 markets.|| |Published [[ARFC] Receipt of Gauntlet Insolvency Fund](https://governance.aave.com/t/arfc-receipt-of-gauntlet-insolvency-fund/10933). [Snapshot passed 12/16/2022](https://snapshot.org/#/aave.eth/proposal/0x1a9deb5c46818aad1a128e65821ecab82fe8c9e01b82551b080f4059f871e91e).|| |Published [[ARFC] Repay Excess CRV Debt on Ethereum v2](https://governance.aave.com/t/arfc-repay-excess-crv-debt-on-ethereum-v2/10955/1). [Snapshot passed 12/16/2022](https://snapshot.org/#/aave.eth/proposal/0xa9634f562ba88a5cd23fabe515f36094ccb1d13294a5319bc41ead5dc77a23f9).|| |[AIP-145: Renew Aave Grants DAO](https://app.aave.com/governance/proposal/145/)|| |[AIP-146: Repay Excess CRV Debt on Ethereum v2](https://app.aave.com/governance/proposal/146/)|2.7m CRV tokens were acquired for an average price of $1.0762 ($2.9m total), clearing excess debt on the Aave V2 protocol ahead of the launch of Aave V3.| |[[ARFC] Extend Safety Module Coverage to Polygon v3](https://governance.aave.com/t/arfc-extend-safety-module-coverage-to-polygon-v3)|| |Deployed Aave Swapper. Shared an [update on the forum](https://governance.aave.com/t/update-on-aave-swapper-and-strategic-asset-manager-contracts/14522) regarding the Swapper.|Swapper contract address: [0x3ea64b1C0194524b48F9118462C8E9cd61a243c7](https://etherscan.io/address/0x3ea64b1C0194524b48F9118462C8E9cd61a243c7)| |Developed Aave Polygon<>Ethereum Bridge|Bridge contract address: [0xc928002904Ec475663A83063D492EA2aE09EbDA1](https://etherscan.io/address/0xc928002904Ec475663A83063D492EA2aE09EbDA1)| |Published Aave Grants DAO Dashboard|https://community.llama.xyz/aave/grants| Please let us know if you have any questions.