Aave
Aave is a decentralized, non-custodial, open-source liquidity market protocol where users can participate as depositors or borrowers. It serves dozens of listed collateral assets, various yield integrations, and a grants program.
Aave was first known as ETHLend, but later, in 2018, it rebranded to Aave under the overview of Aave Companies (now Avara). The protocol launched its first token, AAVE, in October 2020, which also serves as the governance token of Aave DAO.
In March 2022, it launched Aave V3 and Portal within it, allowing Aave assets to be used seamlessly across blockchains. In July 2022, the Aave community unanimously supported Aave Companies’ proposal to issue $GHO - a native decentralized, collateral-backed stablecoin pegged to USD.
Aave DAO Governance
Aave governance consists of the proposition and decision-making process for the different risk parameter changes, improvements and incentives that constitute the protocol policies, together with upgrades to governance itself
All decisions governing the protocol are enacted by specific mechanisms and through the collaboration of various actors.
Governance Framework
Aave DAO and Aave Grants DAO
Both DAOs function simultaneously within the ecosystem. Aave DAO oversees the community and its governance, while Aave Grants DAO is a community-led grants program, focused on growing a thriving ecosystem of contributors within the protocol’s ecosystem. Aave Grants DAO boost contributions by funding ideas, projects and events, such as hackathons, rAAVEs, and more.
Token holders
The AAVE token empowers holders to collectively act as governors of the protocol by enabling to create new proposals and vote on them. “Any user can choose to delegate one or both of the governance powers associated with a token,” either through Aave’s governance portal or programmatically.
Guardians
Aave has a community team, the "Aave Guardians," that arranges itself through councils. It is a group of community-elected individuals or entities who are part of a 6/10 multisig with specific roles delegated by the Aave community. Get to know Aave Guardians here.
Guardians currently fulfill the following responsibilities:
- Protect the Aave Protocol against potential governance takeovers by to "vetoing" an AIP if it is deemed malicious.
- Temporarily holds keys to new deployments of the Aave Protocol on L2 while the Aave finishes the technical implementations for Aave Governance. Currently, only the V3 Avalanche Market is held by the Guardians, as all other markets now use the cross-chain governance module.
- Act as a failsafe emergency actor to pause Aave markets.
Governance Proposals
Aave Improvement Proposals
There are two proposal types:
- Long time lock proposals: These proposals affect governance consensus require more voting time and a higher vote differential. Voting time is 10 days.
- Short term lock proposals: These affect only protocol parameters require less voting time and can be quickly implemented. Voting time is 3 days.
Proposal Thresholds
Quorum and voting differentials needed for passing the proposal vary according to proposal types.
Without quorum, the proposal will not be considered an official proposal, even if the proposal achieves a majority. It is the responsibility of the proposal author to motivate the community to engage in voting in order to reach a quorum. Any changes to the quorum requirements must be amended by the community through an AIP.
Governance Process and Mechanisms
Voting Metrics and Insights
- 164K token holders
- 93% proposal passing rate with a 2.4% participation rate in on-chain voting
- Voting power depends directly on the amount of tokens delegated to members.
Voting Process
- Aave Request for Comments (ARCs) are submitted in the Governance Forum. Once a proposal has integrated suggestions and received enough feedback, the proposal can move forward to the voting stages.
- A Snapshot poll is made to reach rough consensus off chain. This vote is used to gauge the sentiment for ARC’s before moving forward to an on-chain vote (if necessary).
- On-chain voting is required on any Aave Improvement Proposal. An AIP number will be assigned by an AIP reviewer, after making necessary improvements, it is posted on Github. Aave on-chain votes will occur through the Aave Governance Portal. The voting period must last for a minimum period of 5 days.
- 4. A community member with enough proposition power submits the AIP. More specifications about the AIPs submitting process can be found here.
Contribution Pathways
Aave Grants
Aave grants are funding initiatives conducted by the Aave Grants DAO (AGD) with the aim of boosting the Aave ecosystem. All functions of the AGD is overseen by a committee of eleven full-time contributors.
Applications are accepted on a rolling bases for 2 grant initiatives: Rapid Grants (for fast grants allocating a smaller and bigger amount) and Grants Above (allocating amounts above $80K).
The following areas are eligible for grant funding:
- Protocol development
- Applications and integrations
- Developer tooling
- Code audits
- Committees, sub-committees, and DAOs that serve the Aave ecosystem
- Community (marketing and educational)
- Events & hackathons
Aave Grants DAO also conducts Request For Grants, an initiative to better direct builders to apply for grants in high impact areas that are highly beneficial to Aave. Learn about RFG here.
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