[TEMP CHECK] Aave 2030

[AaveLabs]

Summary

This Temp Check proposes the development of a series of innovative solutions and strategies designed to position Aave at the forefront of DeFi innovation for the upcoming years. Building upon the market-leading technologies of Aave V3 and GHO, these ideas, as a conceptual framework, aim to significantly boost the adoption of the Aave ecosystem and scale DeFi to reach the next billion users. Aave Labs suggests a scope for a technical contributor grant to cover the next three years, with an annual review and renewal.

Motivation

Introduction

Aave Protocol has evolved into a leader in decentralized finance recognized for its wide array of assets, conservative liquidation and collateral system, and decentralized governance. Aave has reached this position by continuously implementing risk management and other feature improvements. As a non-custodial liquidity protocol governed by the Aave DAO, Aave has 450k+ token holders who can participate in governance, deciding on all proposed changes to the protocol.

The Aave Protocol has reached an average of 50% market share, thanks to Aave’s continued innovation, increased brand awareness and the committed participation of its community.

To remain leaders in DeFi, we welcome the community to discuss, ratify and build together a plan based on a vision for 2030 and beyond.

Aave to 2030 and Beyond

The crypto ecosystem is ever-evolving and growing to attract new users and financial institutions. While currently Aave is the leading Non-LST DeFi protocol in TVL, it cannot be understated how important innovation and brand awareness are for Aave ecosystem’s continued success in the future. It’s exciting to see how in the past two years many contributors have participated in the growth of the Aave DAO, introducing new technologies that have drastically improved the experience for Aave users and community members. A few notable examples include a.DI and Aave Governance V3 by BGD Labs, Skyward and Merit by ACI risk management by Chaos Labs, security contributors including Certora and treasury management contributors TokenLogic and karpatkey.

In line with the steady advancement of new technologies such as ZK networks, Superchains, and non EVM L1s, Aave Labs is proposing a few key solutions to enhance the Aave Protocol. Given the competitive DeFi landscape, we believe the key to staying ahead is through continued innovation, building and shipping excellent solutions that address the ongoing requirements of the Aave community. The suggested ideas are looking to position Aave at the forefront of DeFi in 2030 and beyond. In the spirit of decentralization, this Temp Check proposes a path and relies considerably on feedback from the community and the participation of contributors for its execution.

We aim to implement this plan together with the community over the next three years. The structured approach that includes regular community check-ins and renewals is designed to ensure that every step aligns with Aave DAO’s objectives and receives community feedback and support.

Aave Labs involvement is confined to a three-year grant, wherein our role is that of a technical contributor to the DAO, providing expertise and solutions in alignment with the goals as approved by the DAO for the grant. Any extended vision beyond this period serves only as a conceptual framework, helping the Aave governance visualize the broader trajectory of progress beyond our specific contribution. Aave Labs does not guarantee any involvement beyond the scope of any approved governance proposal, and to prevent reliance on Aave Labs by the DAO, we will seek to reduce our technical contribution progressively throughout the grant period, empowering the community members to continue owning the future of the Aave ecosystem.

Solutions

Aave Protocol V4

The cornerstone of the 2030 vision is the introduction of Aave V4 – the next iteration of the protocol. We are proud of what the previous versions have accomplished and cannot wait for Aave V4 to showcase the massive step forward the technology will be for the community and the DeFi space.

Given the number of innovations built into V4, the full explanation is presented in a separate Temp Check here. We are excited to unveil the innovations behind the V4 proposal, and we look forward to discussion and feedback from the community.

Cross-Chain Liquidity Layer (CCLL)

When Aave Protocol V3 was initially introduced, one of the main features was Portals - the concept of Aave becoming a chain-agnostic, borderless liquidity protocol. Although the idea was ahead of its time, it initially required significant trust assumptions to function effectively. However, technology has evolved rapidly. With the adoption of CCIP, the concept of superchains, and V4’s Unified Liquidity Layer feature, Aave can soon scale to become a fully cross-chain liquidity protocol. This will allow borrowers to access instant liquidity across all supported networks. These improvements have the potential to evolve Portals into the de facto fast lane bridge, leveraging this new infrastructure as a potential revenue source for the protocol.

GHO and RWAs

Another important development is the emergence and adoption of Real World Assets (RWAs). We believe GHO is the perfect candidate to accommodate the introduction of RWAs within the Aave ecosystem. After the release of Aave Protocol V4, Aave Labs (together with other Aave DAO contributors) would like to focus on innovating solutions around adoption of RWA-based products built around GHO, which will help to scale GHO further as an infrastructure.

Research on this topic is already underway, and we will be working closely with Chainlink to build the necessary technologies.

Aave Network

Aave Labs suggests the introduction of the Aave Network that can serve as the primary hub for Aave and GHO, while remaining multichain and network-agnostic. The network can serve a variety of uses that fulfill requests frequently expressed by Aave users, for example, democratizing access to the Safety Module by lowering cost. The Network can serve as the main voting network for Aave Governance V3 developed by BGD Labs. It can also serve as the primary hub for the Aave cross-chain strategy.

While Ethereum would remain the home of the Aave DAO and the Aave governance, the network can bring unprecedented growth to Aave and GHO by opening up unexplored markets. We believe there are some key features that should be considered:

• Using GHO for fees: with the use of Validium on top of Aave Network, enables cost-effective and micro payments and improves the UX.
• Aave V4 integrated at the network level: Aave V4 will become the main network liquidity hub, with simple integration access for developers.
• AAVE as main staking asset for decentralized validators/sequencers
• Governance control of the Aave Network interfaces to Ethereum through the Aave Governance V3
• Extensive usage of Account Abstraction
• Inheriting the network security from Ethereum

Aave Labs will be monitoring the evolution of both L1 and L2 networks with the goal of assisting the DAO in choosing the best technology for this fundamental piece of infrastructure and to make sure key features above are integrated.

Updated Aave Protocol Visual Identity

To bring together our ideas for the future of the Aave Protocol, we recognize the need for a cohesive and updated visual identity to carry the Aave Protocol into this new chapter. We propose streamlining the Aave visual mark to make it more modern and distinctive within and outside the DeFi space. It is essential that Aave have a distinctive visual mark that reinforces awareness as well as builds brand loyalty. This update is pivotal in propelling the community towards the idea of Aave 2030, ensuring that the visual identity effectively represents the ambitions and supports the community’s strategic goals.

This proposed change and its rationale have been described in a separate Temp Check here, where it can be evaluated, discussed, and if approved by the community, immediately implemented. We welcome feedback on this key element in the associated governance proposal.

Note: The proposed new Aave Visual Identity will be irrevocably licensed to the Aave DAO. This license will grant the community the broad rights to reproduce, distribute, perform, display, and communicate the visual identity for the benefit of the Aave Protocol, the Aave ecosystem, the Aave DAO, and related activities. The use of the visual identity will be strictly prohibited for malicious activities, including but not limited to phishing scams and impersonation. This identity will be separate from that of Aave Labs, which will have its own distinct identity. For the purposes of this proposal, we are using the newly proposed visual identity in an effort to showcase the vision for the brand.

Additional Ideas

The following ideas are projects that Aave Labs will commit to exploring during the three-year-period, but will not form part of the compensation for this proposal.

New Products Built Around Aave

Aave Labs is planning, in the same three year timeframe, to introduce entirely new DeFi products. While these will be new and independent products, Aave Labs is planning to provide the Aave DAO with significant exposure to these new products and their governance, because these technologies are capable of further propelling the growth of Aave and GHO. However, Aave Labs will work independently to determine the terms and technical implementations of these products until they are ready to be shared with the community.

Expanding Aave Protocol to non-EVM chains

2023 and 2024 have been amazing years of growth in the crypto space. While the EVM ecosystem leads the way, there have been a number of emergent, non-EVM networks that have gained considerable user traction. The Aave ecosystem’s homebase is (and should be on) Ethereum. However, given the Protocol’s network-agnostic position, we at Aave Labs believe the opportunity to expand to other networks cannot be ignored.

This aligns with the internal research conducted by the Aave Labs. We are pleased to announce that we are prepared to submit a specific proposal to the DAO shortly. If the proposal is adopted by the DAO, we can move forward swiftly and aim for implementation of the proposal by the end of 2024.

Specification

To effectively manage and implement the ideas outlined in this Aave 2030 Temp Check, we propose the following approach, broken down into specific goals and timelines.

First Year

Agreement Scope:

• Introduction of a New Aave Visual Identity
• Aave V4 Prototype (Q4 2024)
• Aave V4 Code Completion (Q2 2025)

Additional Efforts:

• Integration with a minimum of one new, innovative GHO facilitator
• Support on the integration of one non-EVM chain

Second and Third Year:

• Aave Network
• CCLL (Cross Chain Liquidity Layer)
• Research and introduction of RWA product
• Integration with a minimum of one additional non-EVM chain
• A minimum of one Aave Labs product that is intended to propel growth of Aave/GHO

We will assess priorities on an annual basis at renewal of this proposal.

Funding

Historically, Aave Labs sought retroactive funding from the DAO following the development of Aave Protocol V3. This method had its merits and allowed us to innovate and prove success before presenting the accomplishments to the community for compensation. However, the community requested a more proactive engagement model that states and seeks approval for costs in advance.

We have thus shifted towards proposing a model where we outline the grant roadmap and associated budget in advance. This approach ensures mutual understanding in advance of the proposed work and agreement on the objectives and timeline with sharing and discussing with the community updates along the way.

Requested Budget

For the execution of the first year of this three-year plan, Aave Labs requests a grant with a budget of 15M GHO and 25,000 stkAAVE to cover the following costs:

• R&D
• Technical Engineering Resources
• Non-Technical Resources
• Audits (excluding community’s existing agreements with security contributors)

Terms

The roadmap to realize our ambitious ideas spans three years, underscoring Aave Labs’ long term commitment. To ensure ongoing satisfaction and alignment with the Aave DAO’s expectations, we commit to an annual renewal and review of the agreement. We propose a three-year scope with annual checkpoints for feedback and adjustments, ensuring responsiveness to the DAO’s evolving needs.

• Funding for the First Year:
  • $3 million GHO up-front
  • $12 million GHO streamed over the first year
  • 25,000 stkAAVE streamed over the first year

Why a Three-year Scope?

We propose a three year scope to accomplish this series of far reaching technological innovations for the Aave DAO. Although we recognize that space is ever-changing, and 6-12 month plans are typical in the ecosystem, to successfully achieve this ambitious plan, a longer timeline is required to really push the boundaries of what is possible and to build towards the Aave of tomorrow.

Aave Labs is committed to this proposed three year grant roadmap and to full accountability on results and achievements throughout this journey, in accordance with the DAO development guidelines already in place and with the goal of building technology with the community, for the community.

Upon completing the three-year grant roadmap, Aave Labs will, with community approval, continue to look ahead and determine further steps necessary to advance Aave towards 2030.

Evaluation Metrics

From the DAO’s experience with service providers, we suggest the following metrics and measures of performance:

• Track and document monthly contributions to the Aave DAO, detailing progress across various aspects of the scope.
• Provable participation and/or delivery of the projects described in the scope.
• Direct or indirect participation in projects of other fields of contribution.
• Solicitation of feedback from other contributors and DAO members.
• Direct and transparent engagement with the DAO via the governance forum.

Principles

• Aave Labs acts only as a technical contributor; the Aave DAO remains in charge of all deployments of the code bases that Aave Labs or other contributors produce. Aave Labs engages with the DAO like all other contributors would within the established working relationships and procedures within the Aave DAO.
• All the proposed solutions shall undergo Temp Checks with objectives and specific strategies for each initiative for the Aave DAO to evaluate and approve. All improvements will be built in public together with community feedback and contributions.
• Success requires active community participation. We extend an open invitation to all developers to join us in realizing the ideas for Aave 2030 by collaborating with Aave Labs and the wider community. Participants contributing under this proposal should align with the high-level technical implementation and decisions proposed by Aave Labs.
• Any production ready code written in the scope of the proposals’ funding will be moved to the AaveDAO GitHub repository.
• Aave Labs will not manage the deployment of any written software. Instead, we suggest the DAO engage Catapulta, a service provider specializing in smart contract deployments.
• We are stronger together; harnessing our collective expertise and perspectives to propel the Aave Protocol to the next level.

Next Steps

1. Engage with the community and service provides to refine the detailed proposal
2. Gather feedback on associated Temp Checks (i.e. Aave Protocol V4, New Visual Identity)
3. Incorporate stakeholder feedback and escalate proposal to ARFC stage
4. Development begins

Copyright

The text of this TEMP-CHECK is released under the CC0 license. The visuals and the New Visual identity are subject to and governed by the license specified in the approved governance proposal by the DAO (to be included in the ARFC at a later date).

[A_J]

Finally an epic advancement! :)

[optimus]

Has your team considered using Axelar for your Cross Chain Liquidity Layer implementation?
They support non-EVM chains which would be useful for your plans mentioned in Year 2 & 3.

[Yona]

@AaveLabs

to successfully achieve this ambitious plan, a longer timeline is required to really push the boundaries of what is possible and to build towards the Aave of tomorrow.

I didn’t quite understand this part. Could you explain it in more detail?

[Never]

Great proposal, have a question: [quote=“AaveLabs, post:1, topic:17539”]
the Aave Network that can serve as the primary hub for Aave and GHO, while remaining multichain and network-agnostic.
[/quote]

how to understand this? isn’t there fragment liquidity? With all the EVM/Non-EVM chain and the Aave network, if I were to deposit on Aave, where should I prioritize? Thanks!

[mrtoutlemonde]

I think this part seek to explain that in order to execute the ambitious plan set up by Aave Labs, a long term view is necessary, that’s why the entire plan is looking at 2030 be completed - like the Tesla Master Plan was for 10 years ahead

[0xkeyrock.eth]

Overview:

Competition in the Lending sector is fierce — Since Aave’s v1 launch in 2020, 75+ lending platforms have gained $100m TVL at peak through aggressive growth tactics (E.g Liquidity Mining). Despite this, Aaves’ commitment to balancing safety and innovation has cemented their place as market leader, showing consistent market dominance of around 30-40%. Throughout multiple market cycles, Aave has has shown its resilience and capabilities.

Aaves’ dominance can be attributed to their consistent protocol upgrades:

Aave v1: Pooled risk with two supported assets (ETH and LEND).
Aave v2: Multi asset support (DAI, USDC, USDT, WBTC) with protocol based liquidations.
Aave v3: Single borrowable asset, Isolation modes, dynamic interest rates, Emode feature.

The proposed v4 brings the following changes:

Aave v4: Cross chain liquidity, Aave network, non EVM deployment, RWAs, and an updated visual identity.

We are happy to support the new proposal for v4, and believe this will continue to ensure Aave is cemented as market leader. In specific, we believe the Aave v4 proposal targets two specific factors which are vital to the long term success of Aave.

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Increasing Aaves’ Market Share

Fragmented Liquidity: In recent years we have seen efforts to improve infrastructure to make Ethereum more scalable. While this led to the emergence of Layer 1 and Layer 2 scaling solutions, the side effect was fragmentation of liquidity. In 2020 when Aave launched the majority of TVL was on Ethereum Mainnet - Today TVL is spread across various Layers 1s (Ethereum $52b, BSC $5b, Tron $7.8b) and Layer 2s (Arbitrum $2.4b, Optimism 860m, Blast $1.4b). This has lead to the following drawbacks for Aave:

1. Cross Chain deployments: To remain competitive on different ecosystems, Aave must deploy on multiple chains. This requires initial deployment costs and overhead effort for the DAO and risk team. Each deployment requires a formal governance process, and additional governance is required for adding markets and adjusting risk parameters. Currently Aave has deployed on 10+ different chains.
2. Fragmented Liquidity: The interoperability of assets is limited. Collateral is chain specific, users are limited to borrowing on the same chain they have deposited their collateral. Pooled collateral and Assets Liquidity is also chain specific, meaning lack of Native LPs can become a bottle neck for listing new markets. Due to these reasons Aave is still most popular on ETH L1 with 87% of TVL - even despite the high gas fees.

With the emergence of the Chainlink Cross-Chain Interoperability Protocol, the issue of liquidity fragmentation is greatly improved. CCIP allows for Cross-chain lending, allowing users to borrow any asset on Aave v4 and use it across chains. This gives Aave the following upgrades:

• Interoperability: The proposed Unified Liquidity Layer creates independent and abstracted infrastructure for borrowing assets. With the new Aave Network, Aave becomes the primary hub for cross chain liquidity.
• Less overhead: Reduced overhead costs of deployment and maintenance of Aave across various ecosystems.
• Market Dominance: Currently there is a trend that each chain has a dominant lending platform which bootstraps itself with high incentives. As a result, Aave is required to remain competitive by launching early on new ecosystems. With a cross-chain Liquidity hub proposed with v4, Aave can disrupt this trend and become the leader across all chains without requiring specific deployment strategies.

Non EVM chains: In addition, Non EVM chain are emerging as alternatives to Ethereum. Currently there is no deployment of Aave on non EVM chains, due to Aaves’ core contracts being written in Solidity. While launching on EVM chains requires forking the code to a new chain, a non EVM deployment would require the smart contracts to be rewritten.

Despite this it is clear that Non-EVM chains represent an untapped market for Aave. By launching a Non-EVM deployment Aave taps into billions of TVL previously not possible.

Real World Asset Strategy: At Keyrock our vision is that all assets will eventually become digital. With its bluechip status and ≈10b Value Locked, Aave is extremely well positioned to enable the linking between traditional financial markets with on-chain assets. We are interested to see this play out and can imagine the a future where users can:

• Borrow Fiat against Crypto collateral
• Earn interest on US treasury bonds via lending
• Gain exposure to commodities via Aave

RWAs represent vast untapped potential, and these examples represent only a few possibilities that Aave can unlock with their RWA integrations.

New Brand Identity: User experience becomes a crucial factor when onboarding the new cohorts of crypto users. Our subjective opinion is the design is incredibly well done and an improvement for the brand identity of Aave.

---

Bolstering GHO:

Introduced in 2023, GHO is a Over-collateralized Stablecoin backed by yield bearing assets on Aave. GHO is still in its early stages with a supply of 49m, and the mint caps are set manually by the GHO steward team.

Currently roughly half ($23m) of this amount is staked in the Aave safety module. GHO staked in the safety module will be used as mitigation in the event of a short fall event, in return stakers get stAAVE incentives. These incentives are currently 100 stAAVE / Day (13% APR).

However the limitations of this design are as follow:

1. Scalability: The current Aave Safety Module GHO pool is incentivised by stkAAVE rewards. This strategy has limitations due to the inverse relationship between TVL and APR (as TVL increases APR goes down). The only way to scale would be to increase stAAVE rewards which increases emissions and costs for Aave.
2. Incentive based demand: Incentive based demands is volatile as demand for GHO only exists as long as incentives are high enough. Constant incentives are required to sustain the demand for GHO. A more suitable strategy is create integrations and usecases to create sustained demand.

Aave v4 proposes the following uses-cases / improvements for GHO:

• GHO will be the native coin which pays for fees on the proposed Aave Network.
• Suppliers can opt in to receive Stablecoin interest in GHO.
• Lending Liquidating AMM is proposed to ease GHO liquidations by liquidating collateral to GHO. This can then be used to buy back any asset available in Aave. During this GHO earns interest.
• The introduction of at least one Aave Labs product to propel growth of Aave/GHO.
• GHO will be utilised for the RWA project.

---

Additionally we support the additional improvements suggested in the development proposal:

• Fuzzy controlled interest rates → Reduces overhead for the DAO and risk teams. Automates current manual governance procedures relating to parameter changes. Increases security through faster response time.
• Liquidity Premiums → Improves capital efficiency of the protocol by creating interest rate tranches based on liquidity.
• Smart accounts → Allows the creation of various smart accounts using the same wallet. This feature also enables vaults which enable segregation of risk by allowing users to borrow without supplying collateral to pooled liquidity.
• Automatic Off-boarding → Current process to off-board collateral requires constant governance process for each incremental change to parameters (RF, LT) and can cause liquidations. The off-boarding process automates this process.

---

Regarding the proposed funding the current Aave costs are around $12m / year. With an Annualised fee revenue of $65m / year, Aave is operating at a net profit of ≈50m / year. In addition to this, the Aave treasury has around $50m in assets.

Based on the financial health of the protocol we believe the proposed payment to be a necessary and justified investment for the DAO. Needless to say, we are huge supporters of this proposal.

[neozaru]

I do not believe in a 2+ years roadmap. Especially in this environment that is crypto.

I would suggest building a 1-year roadmap and focus on the most important aspects and see from there.

You have to stay humble and open to new developments (social, technological, political) that can arise.

A Vision for 2030 ? Totally!

A roadmap to 2030 ? Naive and likely ineffective in my humble opinion.

[GabrielSantos]

Furthermore, technology advances very quickly, and in 2023, this may not be as attractive to the public.

[EzR3aL]

Hello @AaveLabs and thank you for this proposal and the shared vision for the Aave protocol.
The scope and features introduced for this 3 year plan highlight the dedication towards Aave and GHO.
These are needed to stay the no.1 defi protocol in lending and overall if we exclude restaking protocols.

But still I have a a few questions regarding the funding.
When v3 was presented Aave (Aave Labs) was asking for approx.16m in total. Which is less for the whole product compared to now for only one year
(see here ARC: Aave V3 Retroactive Funding)
The scope of this year, compared to the proposal from 2022 looks less.

So what’s the rationale behind it? Could you please provide some information.

• How many team member are there working for Aave Labs?

• How much is Aave Labs going to ask for the second and third year?
  Similiar to the operational plan I would assume there is some financial plan.
  Could you provide a list with all cost factor in terms of dollar, like audits, hardware, software, infra, employees (R&D, and so on)?

• How are you justfying that the amount is bigger than what all other service provider are asking for?

• As Aave Labs is a technical provider I have to compare you to BGDLabs, who are asking for nearly 4x less the amount but are basically involved in every development, audit, rescue mission and whatever else has happened in the past. What I want to say is, BGD did more in the past 2 years for the protocol and the DAO than Aave Labs did (imho).

• And last but not least a more provocant question that I wanted to ask last time but now I thinks its the right time.
  Can you confirm that all funding will only be used to develope around Aave and it’s core products which also involves the Aave token and will NOT be used for other ventures of Avara like Lens.
  Because I do represent a few people delegating to me and this is the most asked questions I received in the past and now again.

[AaveLabs]

Thank you for your suggestion regarding Axelar for the Cross Chain Liquidity Layer. The selection of a specific messaging provider is outside the proposal scope, and the DAO will likely assess this decision after the launch of V4. All community contributions are welcomed.

[AaveLabs]

The 3-year grant timeline is proposed to innovate responsibly, conduct thorough diligence, integrate feedback, and effectively reach the proposed objectives. We request that the DAO, in making decisions about the future of the protocol, will factor in the time required for thorough development, testing, and auditing.

[AaveLabs]

The idea is that the Aave Network with CCLL would allow the creation of better tools to manage liquidity across multiple networks. This could reduce liquidity fragmentation because moving liquidity between networks would be near instantaneous. From a UX perspective, there is a possibility for an improvement in moving liquidity between networks. A future opportunity the DAO can consider is for the DAO treasury to earn fees for moving liquidity across networks. Users can choose which networks they use today, however, the Aave Network would bring some advantages to users including transaction costs reduction. If the DAO chooses, the Aave Network could also function as a primary hub for the liquidity provisioning and accounting.

[AaveLabs]

Thank you for your comment and thoughtful questions @EzR3aL

Regarding the grant, it is important to recognize that the funding supports not only the development of V4 and changes that may be proposed by the community during development in public, but also audit costs and the R&D conducted prior to and following this proposal, as well as the creation of a new visual identity. While we do not provide detailed financial data or team sizes, we can confirm that we do not intend to use the funds for the development outside of the scope.

The financial elements of our proposal are based on a variety of considerations, and we believe the budget we’ve proposed is fair, reflecting the scope, development costs, and the commitment required to build the proposed feature enhancements and extensive innovations for the Aave DAO.

[EzR3aL]

Thank your for the answer. While I do think its unfortunate that some simple questions like team size or the financial plan (even rough estimations) cannot be provided, there are other ways to find this out by myself.

Could you provide information on how much % (or total sum) of the asked funds will be used for audits and how many audits are planned? So the DAO can at least see how much is going to AaveLabs and how much to other parties like Certora, OpenZeppelin and other audit firms.
Additionally it would be good to know at least rough estimations for the 2nd and 3rd year.
Why you might be asking?

Let’s pretend V2 is deprecated and V3 & GHO are the only source of revenue. Now we hitting bear market and revenue is declining. How can we make sure that the funding won’t be interrupted by this if we (financial/treasury manager) cannot calculate potential costs? We have to keep in mind that there are other important service provider that need to be paid, we want to extend Merit, which was very successfull, use Orbit to further bolster governance participation and delegation and so on.

I think the DAO has matured and needs to be handled like a company, and a company usually plans its financials upfront.

Thank your in advance

[heyjared]

I love the vision, love Aave labs - but the proposed cost ($17m) for 1 year is crazy high esp including…

“Aave Labs will not manage the deployment of any written software. Instead, we suggest the DAO engage Catapulta, a service provider specializing in smart contract deployments”

Sounds like Aave Labs is bringing new product/features + architectural plans but not actually writing smart contract code. What is the extra cost for Catapulta to work on the smart contracts during year 1?

Disappointing to see Aave Labs not being transparent about team resources, especially for a high priced, long term proposal: 3 years at $51m+ ? (not including smart contract dev expense, assuming same renewal each yr)

$17m at $200k salary = 85 ppl
$17m at $150k salary = 115 ppl

Reviewing the feature set above seems like a squad of 10-15 ppl can do this, especially a squad with so much historical knowledge of the Aave protocol + DeFi…

I don’t mind paying premium for talent, esp Aave Labs talent, but with no coding/maintenance included - the cost is unhealthy to the Aave DAO… esp given the lack of coding / maintenance + transparency in team resources, etc

Please come back with a significantly reduced price 12mo plan (streamed in GHO) outlining deliverables (including coding/maintenance) and milestones paid out in StkAAVE (equity).

Or are there any similar vendors that would like to challenge the above proposal for 1/2 the cost?

[PatrickB]

How can a request for such a large amount of money be given a green light with so little transparency on financial forecasts and team sizes. The proposal looks great but much more information is necessary to justify such a huge financial burden for the Dao moving forward.

[neozaru]

The dice are probably loaded and this will probably pass as a single proposal, but I’ll still give more of my opinion here.

A multi-years roadmap:

• Tends to dilute effort - deadlines are too far.
• Tends to increase spending.
• Increases lack of PMF risk - later pivot.
• Augments sunk costs biases.
• Diminishes flexibility.
• Presents no healthy feedback loop.

Aave Labs argument is that taking time is proof of seriousness and allows for better audits, etc…

I agree to some of this, but I think it’s important to incorporate a little bit of American culture in this very European mindset. Aave won’t succeed “just” because the mission is good for the world. It need that + being the best + being the fastest. There is no reason not to think bigger especially given the requested budget.

If I wanted to be shocking, I would say that with the requested budget, Aave Labs should target shipping all of the content of the roadmap for 2025. I never heard of a company dying and people commenting “They failed because they were way to ambitious”.

But for a more “PC” counter proposal, I’l would say:

1. Split the team in squads, for each theme of the roadmap (a. RWA, b. Infrastructure, c. App, d. Etc…).

2. Have a member of each squad volunteering as representative to communicate with the DAO.

3. Get each squad their own budget from the DAO. With streaming schedule and all

4. Monthly reporting for each.

Some squads could even be mostly outsourced when it make sense (new products / value props).

[AaveLabs]

Thank you for your comments and feedback.

Our approach with a three-year roadmap underscores a deep commitment to the DAO, reflecting a long-term vision rather than a short-term operational plan. This enables Aave Labs not only to adapt to technological advancements and market conditions but also to ensure we are building responsibly for the long haul. We believe in our team’s ability to deliver exceptional impact, and we are eager to continue this journey with the support of the Aave community.

@EzR3aL
We plan to conduct 4-5 individual audits along with formal verification to uphold the high security standards in line with previous versions of the Aave Protocol.

@heyjared
Aave Labs will undertake the end-to-end process of R&D including contract development, continuing with the comprehensive approach established in our contributions to past versions of the Aave Protocol including V3.
Catapulta has already been onboarded as a service provider to assist the Aave DAO with smart contract deployments, so would be a natural fit for this role.
Additionally, the grant budget outlined is specifically for the first year. Decisions regarding grant budgets for subsequent years will be made with careful consideration of the DAO’s needs and community feedback towards the end of the first term.

[ApuMallku]

Is it possible to have a budget breakdown? How many people are going to be working in this project? The funding cost is quite high and I would like to understand what’s the spectrum of this budget.