👻Aave: Add FOX Token as Collateral
Voting Recommendation by (Discord: Raho#0007)
Summary:
Proposal to add FOX (ShapeShift) token as collateral on Aave v2.
About ShapeShift:
Launched in 2014 by Erik Voorhees, ShapeShift is a decentralized mobile wallet for Android and IOS, and Web application, and Defi dashboard! Shapeshift allows users to access defi strategies directly within their application. When launched in 2014, Shapeshift was very unique because unlike centralized alternatives, it did not require user accounts, and offered no custody of their user’s funds! Another aspect of Shapeshift that is nice is that they have a built-in decentralized exchange aggregator. This means, whenever a user places a trade, Shapeshift will scan prices on all exchanges, and provide the best price so that traders get the best available price on every trade!
Shapeshift also has launched their own hardware wallet ‘KeepKey’ (https://shapeshift.com/keepkey). Hardware wallets allow users to store their wallet's private keys offline, and are considered to be one of the safest ways to participate in cryptocurrency trading!
The Shapeshift DAO is able to generate revenues via new user deposits, and as the DAO treasury expands, these revenues will be distributed to contributors of the platform (contributors such as traders, stakers, etc.) via the FOX token. The Fox token is then used for governance of the Shapeshift protocol, and also serves as ‘a utility for a borderless, cross-chain crypto trading platform and portfolio for user self-sovereignty.’. In other words, being decentralized, the Fox token has the ability to govern future decisions of the Fox protocol!
Fox Token Contract Audit:https://github.com/shapeshift/fox-token/blob/master/ShapeShift
Shapeshift Website:https://shapeshift.com/
One of Shapeshift’s beliefs is that the path to success lies within their community, and places a strong emphasis on their community throughout everything they do! At the time of their airdrop, Shapeshift dropped their token to the largest number of participants in crypto history! Shapeshift’s ‘fairdrop’ model really aligns with the Rabbithole vision of blockchain for the masses! Also, with Shapeshift’s DEX aggregator generating the best possible prices across different exchanges and across multiple chains, the user gets the best possible price. This aligns with Rabbithole’s core value of Minnows>Whales! By offering the most affordable option, Shapeshift allows users of all financial backing to participate in decentralized finance!
Proposal advantages:
This proposal seems to be rather one-sided, with the main benefits for Aave outlined in the proposal appear to be based on the speculation of the tokens growth. In this proposal, the benefits stated for Aave are as follows:
Through the obvious mechanics, the addition of FOX to Aave would directly increase the platform’s usage and fees. The lending market for FOX is likely to increase over time; in addition to the aforementioned THORchain and Osmosis integrations, FOX is available on Rari Fuse. The Tokemak community also recently voted to give ShapeShift its own reactor, and in December 2021 the asset was added to Coinbase Pro. As such, it’s probable that demand for FOX in a borrowing-platform context will continue to grow in the months and years ahead
Governance discussion:
https://governance.aave.com/t/arc-add-support-for-fox/7024
Recommendation:
I recommend that the Rabbithole metagovernance pod vote ‘No’ on this proposal. Despite Shapeshift aligning with Rabbithole’s core values, I do not see a clear advantage for Aave or users of Aave within this proposal. Rabbithole Metagovernance’s goal is to become good stewards of the platforms that we contribute to via governance. One of the ways we plan to achieve this goal is through supporting positive-sum proposals, where all parties benefit. Unfortunately, this proposal seems one-sided to me - with the only advantage for Aave and the users of Aave that I see in this proposal stems from token speculation. Personally think that what Shapeshift is creating is nice, and perhaps under different circumstances in the future (which benefit all parties), I would recommend voting yes.
Open Questions:
Feedback:
"Unfortunately, this proposal seems one-sided to me - with the only advantage for Aave and the users of Aave that I see in this proposal stems from token speculation." Indeed, this seems to be the case. I've read your summary 3x now and voted against the proposal.
This has some similar vibes to a couple of previous proposals where you have speculative projects looking to capitalise on AAVE's blue chip brand status. Nice opportunity to be a dissenting voice and help normalise constructive debate.
there might not be an easy answer for this but is there any way to know what the market caps of other assets aave accepted were at the time of the proposal? I know the protocol generally has a reputation for being on the more conservative side but would be interested in seeing at what size they really start considering tokens to be worth adding and seeing if FOX fits in that or not, so we have something a bit more standardized to make decisions off of.
shapeshift market cap is ~80 mil rn so would fit between the C+ and B- tiers (closer to B-). The second table is a bit misleading for our purposes though since it's looking at the market cap at a point in time and not when the proposal was initially put up and I think we want to compare the starting points for each of these tokens on aave.
for instance when DPI was first proposed it was a smaller asset, with a mkt cap of ~125 mil growing to 187 mil by the time that table was snapshotted. That would have also put it in the B- tier for market cap risks.
so does it make sense to vote no on FOX because it's a smaller coin given that things in this tier have been approved before and the project fits with our values otherwise? -https://governance.aave.com/t/arc-add-support-for-defi-pulse-index-dpi/3576
At the end of the day, that’s totally up to the community… I totally see what you’re saying with DPI though, but I do think that there may be better examples as DPI is made up of underlying assets that drive that value…
My recommendation was based on it being a speculative proposal. I don’t doubt that the coin could see growth in terms of market cap, but that’s not guaranteed & makes it difficult to consider ‘positive sum’.
One example of an alternative proposal could look like: Fox offers tokens from treasury to incentivize aave users contributing. This example at least benefits 2/3 parties.
I personally just couldn’t find the justification for recommending a proposal that essentially was saying ‘adopt our token so we can benefit’… It’s a tricky situation for sure, and I definitely see both sides here… but my conclusion was based on the fact that it did not benefit any party besides Shapeshift
I think one counterpoint I'd put forward is that we recently just voted a majority yes to adding UMA to aave and I'm not sure that their proposal puts forward reasons that are much stronger. from their proposal, the only benefits for aave I could find explicity stated was: "AAVE will obtain a first mover advantage for enabling users to borrow against their UMA tokens."
this strikes me as pretty similar to the upside that FOX is suggesting:
"Through the obvious mechanics, the addition of FOX to Aave would directly increase the platform’s usage and fees."
They (FOX) mention that they have a rari fuse pool, but if I'm looking at the right one it's pretty much unused (https://app.rari.capital/fuse/pool/6) so aave would essentially be the first mover for this too.
I definitely see the similarities, but at the same time I think they are unique cases. UMA (considered a 'blue-chip' with an outstanding track record) has 5x the market cap of Fox, while also bringing in investors from top centralized exchanges. UMA also has very innovative tech that drives the utility of their token, and doesn't rely on defi listings to grow... its supplemented by them. I do see the argument to be made here, but I personally think they are unique in terms of services offered to users, and also in the sense that UMA is already pretty well established.
Agreed that these are two different value props given the market cap but was more just using UMA as a way to show that not all assets being added are being done so with additional benefits to aave than just increasing it's tvl. and I think shapeshift is offering some genuinely innovative and useful technology by partnering with other orgs "Through integrations with DEX and DEX aggregator protocols such as 0x, THORChain, and Osmosis (in-progress), ShapeShift enables users to seamlessly move crypto assets across chains with no KYC, custody, nor added fees." anyway fwiw I actually agree with you in the end on this lol, I'm voting no too, but more just because I agree it's too early and I'd like to see their tech a little more built out, not really because of something like the market cap. I do think it's important that we're consistent with the lines of logic we take when we're representing a larger community, so that there's less room for the perception of favoritism towards some protocols etc.
Wondering if there is some type of risk or rating template? Things like market cap, purpose, benefits, risks, etc can start to make my head spin if I don’t have a consistent way to organize and say well in x situation we have traditionally gone y way. It also helps to really see outliers. It’s early for me so I am still in bed and no coffee so hopefully that made sense.… also I’m sure there is a better thread for this question but since it was this topic that made me wonder, positing here. Thanks again for all that you do here. Playing around in crypto (not trading but actually digging in) can definitely a full time job so I appreciate what you’re doing.
Execution Status: Executed
Vote: No
Community Vote
1 Y
6 N
Pod Vote
1 Y
22 N
Last updated