Overview

Aera Finance (https://aera.finance/) is an autonomous, non-custodial, and data-driven protocol for DAO’s to manage their treasury. Aera is currently utilized by DAOs like Compound, Threshold, Seamless, and others, as well as by DAO service providers including Questbook and OpenZeppelin. This proposal outlines a partnership where Aera will integrate several Gearbox v3 passive strategies as available options and Gearbox will deposit $1M into an Aera vault to be deployed via those strategies. Aera will comarket with Gearbox and make future Aera customers aware of the Gearbox integration for potential use.

About Aera

Aera is a solution for optimizing DAO funds autonomously and on-chain. For most DAOs, treasury funds (e.g. reserves, treasuries, safety modules, backstops) are not actively managed or adjusted based on market conditions. For DAOs, this can lead to an inability to maintain runway, cover liabilities, and benefit from growth in the market. Traditional institutions can allocate funds to more nimble managers who make day-to-day decisions, but DAOs face numerous challenges with this model including governance and creating strong incentive alignment with external managers. Aera was built and incubated by the team at Gauntlet (https://gauntlet.xyz/). Aera helps to minimize bureaucracy. The DAO doesn’t need to plan strategies, but rather just pick assets and define its objective. The Aera protocol autonomously rebalances DAO treasury based on market conditions. Gauntlet is currently the first Guardian operating on Aera.

How Aera Works

This initial version of Aera allows DAOs to effectively manage treasury assets in an autonomous, risk-aware manner. After successfully testing Aera internally at Gauntlet for over 1 year and operating a ETH/USDC Aera vault on Polygon with our own funds, we collaborated with other blue-chip DeFi treasuries, like Compound (https://www.comp.xyz/t/aera-pilot-for-compound-v2-reserves/4655), Moonwell (https://forum.moonwell.fi/t/proposal-pilot-aera-for-moonwell/490), and Threshold (https://forum.threshold.network/t/tip-058-pilot-aera-for-threshold/658) to onboard their treasuries to Aera.

In addition, Aera’s security has been audited by Spearbit, which can be seen in our docs (https://docs.aera.finance/contracts/security). Additionally, Aera conducted treasury management research for the Arbitrum DAO (https://forum.arbitrum.foundation/t/arbitrum-treasury-management-report-by-aera/20652).

Aera provides DAOs with a one-stop, non-custodial solution for managing treasury funds efficiently and transparently. The Aera protocol consists of vaults, which are constructed on a per-protocol basis and can hold a combination of stablecoins, native tokens, and other cryptocurrencies. See attached image for diagram.

The portfolio strategy of the vault is determined by each DAO and is highly customizable ranging from simply keeping fund proportions in line with liabilities, to complex strategies using liquidity positions to provide POL. Vaults are automatically rebalanced by vault Guardians who propose updates to the portfolio based on the DAO’s desired portfolio strategy.

About Aera Guardians

When an Aera vault is created the vault owner (in this case Gearbox DAO) specifies a set of guardrails for their treasury. These guardrails include:

• Assets allowed in the vault (USDC, ETH, etc.)
• Whitelisted strategies (stablecoin yield, eth yield, protocol owned liquidity, etc.)
• Whitelisted DeFi platforms (Gearbox Passive v3 strategies, Uniswap GEAR/USDC pool, etc.)
• Slippage (e.g. max 3% daily slippage, or as defined by the DAO) Treasury objective function

The Guardian will then utilize off-chain logic to suggest optimal treasury rebalancing within the confines of the vault guardrails. Guardians are not able to suggest transactions that violate the vault’s guardrails nor can they withdraw the assets from the vault. For the purposes of this proposal, Gauntlet will be the Guardian for Gearbox’s Aera vault.

Guardians cannot:

• Withdraw vault funds
• Swap into an asset or deploy a strategy outside of vault guardrails
• Utilize non-whitelisted protocols

Proposal

Aera will integrate several Gearbox v3 passive strategies (USDC, ETH, DAI) as possible yield generation strategies for Aera vaults. Once we integrate, we will set-up a vault owned by the Gearbox DAO at which point Gearbox would deploy $1M notional into these integrated strategies. The Gearbox DAO can withdraw the funds from Aera at any time.

Implementation Steps

1. Gearbox governance approves partnership proposal.
2. Aera integrates Gearbox v3 passive strategies.
3. Gearbox deposits $1M USDC into an Aera vault.
4. The Aera vault autonomously swaps the $1M USDC into equal amounts of USDC, ETH, and DAI with minimal slippage. Gauntlet, as the guardian, will cover all gas costs.
5. The vault will then deposit the assets into their corresponding Gearbox v3 strategies.
6. Gearbox DAO can view the live status of their vault, the underlying strategies, and historical performance via the Aera Dashboard.
7. Gearbox DAO can update their treasury strategy in the future to include any other available strategies: a. Levered ETH staking b. Other stable yield strategies c. Protocol-Owned Liquidity d. Targeted Volatility e. Diversification out of native governance token with minimal price impact
8. Gearbox DAO can access any or all of their funds via the non-custodial design of Aera at any time.

Benefits for Gearbox

1. Gearbox/Aera Availability: Aera will comarket this partnership with Gearbox to promote the integration. Current and future Aera customers will be able to opt for Gearbox’s strategies in their treasury management.
2. Autonomous treasury management: Gearbox will be able to maximize the utility of its treasury while benefiting from continuous data-driven risk management. As DeFi markets evolve, the Aera vault will autonomously update the specific positions in the vault, if needed.
3. No fees, no lock-ups, non-custodial: Aera currently offers vaults to users with 0% fees and no lock-ups. Due to Aera's non-custodial design, Gearbox will be able to withdraw its assets whenever it wants. This includes any and all vault operations.

Final notes

Integrating Aera with Gearbox gives Aera an additional attractive source of yield for its current and future customers. Per DeFi Llama, Gearbox's base rates on the selected strategies are competitive, if not sometimes better, than what Aera offers today (current: Aave, Compound, Morpho), and Aera's customers have primarily indexed towards base yield. The Aera team is in active conversations with other protocols who are interested in onboarding to Aera and utilizing Gearbox passive strategies. Should Aera integrate, Gearbox would be a noted and available option to both current and future Aera customers.

Regarding fees: Currently, Aera charges no fees whatsoever. At some point, Aera will turn on its notion of a fee switch. However, there is no current schedule for this and it's not on the foreseeable roadmap. Furthermore, even when a fee switch is turned on, the fee would have to be accepted by the vault owner (in this case, the Gearbox DAO) in order to take effect. There is no possibility that fees can be turned on without the vault owner accepting them via transaction. As Aera's roadmap develops, we'll ensure we keep the Gearbox DAO informed of any information regarding this well in advance of any go live.