ARC: Add FOX Token (ShapeShift) as collateral

Please see this forum post for additional context about ShapeShift's roadmap, as well as extensive links: https://governance.aave.com/t/arc-add-support-for-fox/7024

AIP: TBD Title: ARC - Add FOX Token (ShapeShift) as collateral Status: Proposal Authors: @valthedad @seven7hwave

SUMMARY

As explored in more detail below, listing FOX on Aave would provide an opportunity to earn additional fees as FOX holders collateralize their assets and increase platform liquidity. FOX is a token with a growing presence in the broader DeFi ecosystem, and is tied to an open-source platform that reduces friction and creates a better experience for crypto users.

BENEFITS FOR AAVE

Through the obvious mechanics, the addition of FOX to Aave would directly increase the platform’s usage and fees. The lending market for FOX is likely to increase over time; in addition to the aforementioned THORchain and Osmosis integrations, FOX is available on Rari Fuse. The Tokemak community also recently voted to give ShapeShift its own reactor, and in December 2021 the asset was added to Coinbase Pro. As such, it’s probable that demand for FOX in a borrowing-platform context will continue to grow in the months and years ahead.

FOX TOKEN BENEFITS

The roadmap for the ShapeShift DAO is ultimately driven by the community of FOX Token holders. Holding the token provides those holders with a number of benefits, including exposure to ShapeShift’s various value-accrual mechanisms:

• Revenue-sharing agreements with DeFi projects integrated into our platform, such as Yearn
• Revenues generated from commissions from validators operated on behalf of the DAO
• Revenues generated from allocating assets in the DAO’s treasury to DeFi strategies

Our newly-launched V2 platform is available at https://app.shapeshift.com. This version is open-source, supports multiple wallets, multiple blockchains (not limited to EVM-compatible networks), and is architected for complete decentralization.

The new ShapeShift, powered by a full open-source stack, will enable completely decentralized access to DeFi protocols across any chain. Additionally, the upcoming FOX Chain will provide backend node infrastructure for any interface that wants to be truly decentralized.

RISK MITIGATION

In July 2021 a comprehensive audit of Fox Token was undertaken by BlockchainLabs.NZ. The token’s smart contract has been live since 2019 and has a track record of bug-free interactions with the Ethereum blockchain. The token’s source code is viewable here: https://github.com/shapeshift/fox-token

AAVE PARAMETER SUGGESTIONS

LTV: 55%-65% Liquidation Threshold: 65-70% Liquidation Bonus: 8% Borrowing Enabled: Yes Reserve Factor: 25%