This is an archive of our post on Aave governance forum. Read the full thread here.

LlamaRisk is excited by the prospect of this proposal. The potential long-term benefits significantly outweigh the identified risks, with implementation being the most critical concern. While the proposal is exploratory, we’ve identified several areas that would benefit further clarification. We understand that many discussions and details are forthcoming, and these points can be further developed and clarified during the ARFC stage. As such, this reply will be largely high-level.

The proposal’s core focus—redistributing excess revenue to relevant actors in Aave—is highly attractive. This approach will bring tangible value to stakers and align incentives with voters as long-term focused contributors. It should enhance Aave’s appeal to depositors seeking reliable, safe yield on assets. Moreover, thanks to careful collaboration between @ACI and relevant stakeholders, the proposal offers numerous secondary benefits:

1. Increased capital efficiency through slippage-free debt repayment via aTokens, reducing lost revenue for the DAO.

2. A phased implementation plan to aid voter understanding.

3. Conservative, long-term focused parameters for the Buy and Distribute program.

4. Potential revenue from Umbrella restaking.

5. Timely sunsetting and migration of LEND.

6. GHO-specific benefits enhancing stablecoin stability, potentially decreasing barriers to GHO growth and increasing DAO revenue.

7. The innovative AntiGHO mechanism is an elegant solution for revenue sharing.

While we strongly support this proposal, we’ve identified a few areas that may present challenges:

1. Complexity and unintended consequences: The multi-faceted nature of the plan increases the execution risks.

2. AntiGHO education: This novel concept may require robust educational efforts to ensure market participants fully understand and utilize its potential.

3. Safety Module transition: The phasing out of the existing Safety Module must be managed carefully, with thorough stakeholder consultation and clear communication.

4. We have doubts regarding the future utility of stkAAVE and need to reflect further on how slashing hooks might be implemented.

Despite these challenges, the proposal’s benefits substantially outweigh its potential costs. We want to thank @ACI and all parties it consulted for this comprehensive proposal. The consequences of this going ahead will be massive for Aave, and we are grateful to assist a DAO that contains so many contributors with such a focus on long-term thinking.