As part of Aave’s Safety Module, an 80/20 AAVE/WETH pool was created which has since grown to be the largest pool on Balancer v1. The creation of this pool, along with the dual incentives of BAL + AAVE, established a strong partnership between Balancer and Aave. That partnership has continued with the ongoing development of the Aave Asset Manager (AM), which will be the first AM deployed on Balancer v2.
Motivation
Given the critical importance of the Safety Module, Aave requires additional time to migrate their pool to Balancer v2. In order to preserve the allocation of 12,500 BAL per week the pool was receiving before v2 Liquidity Mining started, we need to give Ballers the authority to allocate BAL to the 80/20 AAVE/WETH pool on v1.
Specification
The Ballers will initially allocate two Tier 2 slots and one Tier 3 slot for a combined 12,500 BAL per week - this will be reflected in the next weekly vote on the Baller-only snapshot. Going forward, the Ballers will have sole discretion to adjust this pool’s allocation as they see fit. The BAL allocated to this pool by the Ballers will go directly to users who have staked BPT from this pool in the Safety Module, meaning if you enter this pool and do not stake in the Safety Module you will not get BAL rewards.This pool will no longer be included in the v1 reward calculations.
Note: Aave has agreed to a three month migration deadline. BAL rewards will be provided during this time period, though not necessarily at the full 12,500 BAL per week. Ballers can choose to lower the amount if they deem it appropriate. At the end of three months, if they have not migrated to v2 then BAL rewards for their pool will end. The migration deadline will be September 20th, 2021.
can you please explain better the reasoning behind this allocation of extra BAL, please? You mention “critical importance” as a factor for the delay which is vague. Would you mind elaborate more? I assume Aave had plenty of time to prepare for the migration, including the 8 weeks period we are all going through now. Are they finding difficulties? Or is it just a strategic move to assure a minimum of 12,000BAL/week at all times during the transition? If that is the case, I would not support the baller’s “sole discretion” to allocate this capital. According to @Fernando, BAL distribution should be as inclusive as possible, levelling the field for all participants. Including Aave.
Aave is very cautious when it comes to new development. There is a lot of money on the line and v2 has not been battle tested to the extent that v1 has. I don’t really know anything more specific than that unfortunately.
As far as your other points, I’m not sure exactly what you’re asking (sorry! )
The Ballers were given control over liquidity mining allocations on v2 as part of a previous governance vote. However, there was nothing in that proposal that discussed allocating BAL to a specific v1 pool. Thus, this new proposal was needed to bring the AAVE/WETH v1 pool under the discretion of the Ballers given its special significance.
Apologies if my points were not clear enough. English is not my first language.
Let me be more specific.
My questions/points are:
1- Why Aave needs special treatment apart from the facts that large amounts of money are on the line? If they are not ready to move to V2 so be it. They should just accept fewer rewards as is everybody else. I guess my point is, no special treatment should be given to anybody, from the small investor to the large DeFi player;
2- apologies again, but when you use the non-battle-tested reasoning as a valid justification for this particular proposal, I immediately deduce that my funds on V2 are not as safe as when they were on V1 and that, those funds, are actually used to “battle-test” the protocol. Are you implying retail LP funds are less important and deserve a different treatment?
3- From your perspective, why smaller LPs do not deserve the same set of rules as AAVE?
4- On different occasions, @Fernando mentioned “inclusivity” as a core value in Balancer’s culture. Do you think this proposal respects these values? In my opinion no, and I’ll tell you why: my funds are as important to me as AAVE’s funds are to them. But I have to make sure I find the best risk/reward ratio at all time, battle test, and optimise my strategy by the set of rules I’ve been given. AAVE leapfrog all this and has a deal that, to my eyes, is unfair.
This is the problem I saw with the Ballers (nothing personal): having the risk of humans giving special treatment to specific entities depending on their weight instead of just having the same rules for everybody, no exceptions.
@zumzum I just want to make clear, because there seems to be some confusion: the funds in the AAVE pool are retail funds. This isn’t the Aave team’s personal treasury; it’s a staking pool with 462 holders. The purpose of this proposal is simply that the community would like to continue incentivizing this AAVE/WETH liquidity on Balancer, but the scope of the V2 liquidity mining does not extend to V1 pools by default. This proposal would extend it to just this one V1 pool, which is unable to migrate to V2 in a timely fashion.
Reasoning for special treatment is to preserve the partnership between Aave and Balancer. They expect BAL rewards so to remove it from them would not be seen favorably by them. We’d happily incentivize an Aave pool on v2 but we do not want to fracture their liquidity and reduce the size of the Safety Module.
I have no doubt Balancer v2 is as secure as possible. In my opinion, the longer smart contracts operate in the wild without issues the better. So you could say v1 is safer than v2 and be totally justified. You could take the opposite opinion as well. I have no insight into the amount of retail funds in Aave pool compared to other pools so can’t speak to retail favoritism or prejudice.
I don’t know if the Aave pool is made up of small or large LP’s - I imagine a mix of both. So I think this proposal benefits both small and large LP’s.
Inclusivity is important, but the strategy approved by BAL governance for BAL rewards on v2 forces us to pick and choose which pools can get BAL. So you could look at that and say v2 rewards will be less inclusive compared to v1 and be somewhat justified in holding that opinion.
Hi @rabmarut,
thank you for the reply.
I am fully aware that the AAVE 80/20 pool is mainly made up of “retail” funds. I also understand the reasoning and purpose of the proposal, including the fact that AAVE is a strategic partner. What I don’t like is the special treatment. Far beyond reasonableness, as such benefits/treatments are not even guaranteed to BAL/WETH LPs.
Such efforts to continue to incentivize strategic liquidity pools have not been made for native BAL pools. I would like to remind you that the initial proposal for the V2 liquidity mining on the BAL/WETH pool was expected to be around 14% APR. In light of this, a long discussion arose which led to important changes in the distribution of BAL tokens.
As you know, there are currently four Tier 1 slots:
80/20 BAL / ETH, dynamic fee
60/40 ETH / DAI, dynamic fee
50/50 ETH / WBTC, dynamic fee
DAI / USDC / USDT stable pool
The proposal requires the allocation of
one “tier 1” (15,000BAL per week) plus
two “tier 2” (10,000BAL per week 5,000 * 2)
which in itself is not clear (the proposal is for 12,500BAL/W). Furthermore, according to current conditions, 60,000 BAL are allocated to tier 1, leaving only two options available:
dilute the weekly BAL and move from 4 to 5 Tier 1 pools or
eliminate one of the 4 pools mentioned above.
What is the strategy? What I am not liking is Ballers authority to assemble and disassemble the community-voted rewards structure at will.
I don’t see my reduction in BAL distribution favourably either. But I had to accept it because these were the rules voted by the community. Do you consider that this statement is acceptable when seen through the eyes of a BAL holder?
My personal BAL rewards will be down significantly when V2 LM will be implemented. But, again, I have decided to accept it since I am not the one who decides.
I am not entirely sure this was the meaning of the initial proposal. To my understanding, the Baller committee was established to give some sort of fast response and adapt to market conditions and opportunities. And to focus mainly on Tier 2/3 reward allocations. This proposal completely upsets the initial purpose of the Ballers commission and creates a sense of uncertainty around BAL allocation policy because, by doing this, you could potentially change the rules on a weekly basis.
@zumzum Are your concerns alleviated by @DavisRamsey’s fixed typo? I apologize for not detecting the typo; but there was never any intention of manipulating Tier 1 here. As you pointed out, the plan is 12,500 BAL per week, which is less than a Tier 1 slot. The Ballers are not exercising any additional power in this proposal except to allocate Tier 2/3 slots to a V1 pool, which was never explicitly stated as a possibility in the original LM proposal. The entire purpose of this proposal is to be very careful about respecting the rules agreed upon by governors, which is why this extra inclusion of a V1 pool must be passed by a BAL vote before the Ballers can proceed. The Ballers are certainly not free to change the rules on a whim.
All clear now, thank you! I was alarmed by this proposal as you have probably noticed.
Please, next time, can I kindly ask for more attention on how things are written? I know you guys are busy but would certainly help on saving time to all of us.
)