Rationale:

Add GHST as collateral on Aave Polygon market.

Reference:

ARC Proposal: https://governance.aave.com/t/arc-list-aavegotchi-ghst-token-as-collateral-on-matic-aave-network/3619/3 The DeFi Case for GHST Medium Post: https://aavegotchi.medium.com/the-defi-case-for-ghst-256a8653346a

Overview:

GHST is the eco-governance token of Aavegotchi, a fast-growing NFT game live on Polygon with NFTs backed by Aave aTokens, single-staking with 50-100% APY, multiple liquidity mining partnerships, and its own secondary market for NFT trading.

GHST token has been live on Ethereum Mainnet since September 2020, when it was launched via a continuous bonding curve DAICO sale (still live today at aavegotchi.com/curve).

The token was launched at 0.2 DAI / GHST and currently sits at around 2.10 DAI. The all-time high is around 2 DAI / GHST. GHST is priced in DAI because unlike most tokens in crypto, it is actually backed by a DAI reserve at a 33% connecting weight. This makes the price more stable because it takes more in/out to change the price.

GHST was bridged to Polygon in January 2021, with more than 50% of its current total supply locked into the Polygon Bridge. It is well-distributed, with more than 17,000 holders and stakers on Ethereum and Polygon combined, and is very active, with more than 1.2 million transactions and an average volume of $50M on multiple top-tier CEXes and DEXes.

Use Cases within the AAVE Ecosystem

GHST has many use cases which make it an excellent choice for being listed as an Aave collateral:

• Staking in Aavegotchi Staking contracts, earning FRENS
• Providing liquidity on DEXes
• Participating in #BidToEarn Auctions, where getting outbid earns you GHST
• Staking as collateral within Aavegotchi NFTs
• Purchasing and trading Aavegotchi NFT assets

GHST’s relatively low normalized volatility also makes it an excellent choice for a collateral for borrowing.

Risk Analysis:

GHST Overall Risk is: B

Smart Contract Risk: B-

Maturity: 333 Days (Deployed on 9/14/2020) Transactions: 1,274,683

Counterparty Risk: B+

Holders: 17,018 (Ethereum: 5854, Polygon: 8481, Stakers: 2683) Permission: Permissionless

Market Risk: B

Market Cap: 130,000,000 Average Volume: $50,408,294 Normalized Volatility: 6%

Overall Risk Score: B

Proposed Risk Parameters

Unlike most asset applications, we would like to propose two separate Risk Parameter options and allow the community to vote on their favorite.

Option 1 is more conservative and in line with collaterals on the Aave Ethereum Market, while Option 2 is more liberal and similar to other collaterals on the Aave Polygon Market.

Finally, we offer an option to only use GHST for borrowing, and an option to decline the listing completely.

Risk Parameters Option 1

LTV: 25% Liquidation Threshold: 45% Liquidation Bonus: 12.5%* Reserve Factor: 20%

Risk Parameters Option 2

LTV: 50% Liquidation Threshold: 65% Liquidation Bonus: 12.5%* Reserve Factor: 20%

*In their recent report, Gauntlet suggested using max 12.5% LB

Snapshot Choices

• Choice A -- Do not list
• Choice B -- Only Borrowing Asset
• Choice C -- Risk Param Choice 1
• Choice D -- Risk Param Choice 2

Full Disclosure

Stani Kulechov is an official advisor of Aavegotchi, and Aave has invested into Pixelcraft Studios, the development team behind Aavegotchi.

Thank you for your consideration!

❤️ Aavegotchi Fam