[FIP - 378] Aave AMO

Authors

Frax Core Team

Summary

This proposal seeks to onboard and activate an AMO that lends FRAX to Aave v3. We propose authorizing a lending AMO to deposit minted FRAX into the aFRAX v3 pool with a maximum authorized allocation of 100,000,000 FRAX.

Background and Motivation

Aave is a decentralized, non-custodial liquidity protocol where users can participate as depositors or borrowers. Depositors provide liquidity to the market to earn passive income, while borrowers can borrow overcollateralized (perpetually) or undercollateralized (one-block liquidity) manner.

Algorithmic Market Operations (AMOs) make FRAX one of the most potent stablecoin protocols, creating maximum flexibility and opportunity without altering the base stability mechanism that made FRAX a leader in the stablecoin space.

This integration will enhance the overall utility and stability of the FRAX ecosystem and help to attract more users to Frax Finance assets, further growing our user base and ecosystem.

Proposal Details

This proposal involves minting FRAX and depositing it into a designated Aave v3 lending market. The goal is to provide sufficient liquidity for FRAX in order to overcome supply-side shortages in lending, thereby fostering growth on the borrowing side. By kickstarting the market for larger borrowers, we aim to create a more dynamic and robust lending environment for FRAX on Aave.

Voting

  • For: Approve the onboarding and activation of the Aave AMO with a max authorized allocation of 100,000,000 FRAX.
  • Against: Do nothing.
5 Likes

This proposal is up for voting here: Snapshot

I like this proposal, generating revenue for the DAO through AAVE lending pool. However, Iā€™d like to suggest considering using Compound instead, as it is more capital efficient.