MIR-13┃Add AAVE as collateral on Mimo on Ethereum

Summary:

This proposal aims to add AAVE as new collateral on Mimo on Ethereum.

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://etherscan.io/token/0x7fc66500c84a76ad7e9c93437bfc5ac33e2ddae9 Audit(s) AAVEs : https://docs.aave.com/developers/deployed-contracts/security-and-audits
Chain requested : Ethereum 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 1,7M transactions since its launch on Ethereum.

Counterparty risk: A- Aave Protocol launched on Ethereum in January 2020 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 124k holders on Ethereum.

Market Risk: B- The token is available on top exchanges with nearly $1,4B market cap with a daily volume of $1M on Ethereum although a large share of AAVE’s supply is locked. The liquidity available on Ethereum is nearly $115M ($110M from the 80/20 AAVE-ETH BPT).

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

Liquidity Risk of PAR on Ethereum: A- The PAR-USDC UniV3 pool has 1,68M$ in concentrated liquidity, composed of 50% PAR and 50% USDC. The PAR-USDC Curve pool has 425k$ in liquidity, composed of 52,1% PAR and 47,9% USDC at the time of writing. The MIMO-PAR Balancer pool has 310k$ in liquidity, composed of 80% MIMO and 20% PAR.

This provides the following price impact on the following trade sizes: 1000 USDC → PAR: 0.00% 10000 USDC → PAR: 0.03% 25000 USDC → PAR: 0.07% 50000 USDC → PAR: 0.14%

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

Community size : Twitter: 485,3k followers Discord: 46,9k members

Means: Human resources: Multisig DAO signers will need to sign and execute transactions to add AAVE as collateral on Mimo. Treasury resources: There is no cost for the treasury to add AAVE on Mimo Ethereum.

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 Ethereum
• Against adding AAVE as new collateral on Mimo on Ethereum
• Abstain

Authors: @starny & @JeanBrasse from Mimo Labs