MIR-4┃Add AAVE as collateral on Mimo on Polygon

Summary: This proposal aims to add AAVE as new collateral on Mimo on Polygon.

Rationale : Aave protocol is a decentralized multi-chain & non-custodial lending platform, users can supply and borrow different assets. AAVE token is used as the center of Aave Protocol governance, AAVE is used to vote and decide on all parameters of the protocol such as tokens allowed in lending and borrowing, deployment of the protocol on a new chain, treasury management, contributors compensation, etc. Apart from this, AAVE can be staked (stkAAVE) within the protocol Safety Module to provide security/insurance to the protocol/depositors. Stakers earn staking rewards and fees from the protocol.

In Aave v3, it will be possible, thanks to cross-chain portal to borrow on collaterals through several chains. This is just one of many features that will be coming soon, such as Flash-loan and the arrival of a new USD stablecoin ($GHO).

All these different features make Aave one of the biggest protocols on several chains accorded to Defi Llama and are used by institutions, wealth managers and private funds through a permissioned market (Aave ARC).

You can learn more about Aave in their HUB documentation / v1 whitepaper / v2 whitepaper / v3 whitepaper.

Once the vote is accepted on Snapshot, we will determine the associated liquidation ratio, minimal collateral ratio, debt ceiling and liquidation bonus in a second MIR discussion.

Project Presentation: Protocol name : Aave Token requested : AAVE Token contract address : https://polygonscan.com/token/0xd6df932a45c0f255f85145f286ea0b292b21c90b Audit(s) links : https://docs.aave.com/developers/deployed-contracts/security-and-audits
Chain requested : Polygon Relation with the project : None. Website: https://aave.com/ Twitter : https://twitter.com/AaveAave Discord : https://discord.com/invite/aave

Token metrics & Risk assessment:

Smart Contract risk: B The code has 5 audits from ABDK, OpenZeppelin, Peckshield, Auditor, Sigma Prime and Trail of Bits. Aave has $13B in total value locked between several chains. AAVE has generated more than 6M transactions since its launch on Polygon April 2021.

Counterparty risk: A- Aave Protocol launched on Ethereum in January 2020 on Ethereum and is now among the top money markets for depositors and borrowers on several chains. There is no mint function in the Token smart contract, so, the team can't mint token and the maximum supply can't be changed. There are currently 189k holders on Polygon.

Market Risk: C The token is available on top exchanges with nearly $1,5B market cap with a daily volume of 650k$ on Polygon although a large share of AAVE’s supply is locked. The liquidity available on Polygon is nearly $5,2M.

Chain Risk : A Polygon had 0 outages over the last 6 months. (https://polygonscan.com/chart/blocks)

Liquidity Risk of PAR on Polygon: A- The PAR-USDC UniV3 pool has 632K$ in concentred liquidity, composed of 20% PAR and 80% USDC at the time of writing. The 2eur Curve pool has 910k$ in liquidity, composed of 52,76% PAR and 47,24% jEUR at the time of writing. The 4eur Curve pool has 762k$ in liquidity, composed of 19,28% PAR, 18,09% jEUR, 39,89% EURS and 22,74% EURT at the time of writing. The MIMO-PAR Balancer pool has 172k$ in liquidity, composed of 80% MIMO and 20% PAR.

This provides the following price impact on the following trade sizes:

• 1000 USDC → PAR: 0.06%
• 10000 USDC → PAR: 0.13%
• 25000 USDC → PAR: 0.25%
• 50000 USDC → PAR: 0.44%

Overall Risk : B The Overall Risk is the average of the points mentioned above.

Community size :

• Twitter: 485,3k followers
• Discord: 46,9k members

Technical implementation: Add AAVE in the ConfigProvider Contract with all parameters decided by the Mimo governance. Set the chainlink oracle related to the AAVE: AAVE/USD into PriceFeed Contract

Voting options:

• Add AAVE as new collateral on Mimo on Polygon
• Against adding AAVE as new collateral on Mimo on Polygon
• Abstain

Authors: Starny & Jean Brasse from Mimo Labs