👻Aave: Deploy Aave V3 on Metis Andromeda

Voting Recommendation by (Discord: Raho#0007)

Proposal: Snapshot

Summary:

This proposal is for Aave to launch their protocol on Metis Andromeda’s L2 optimistic rollup chain.

Aave is currently working on something called ‘Portals’. This will allow users to deposit tokens into Aave on one chain, and then withdraw them on a new chain (this can be thought of as a ‘router’, similar to that of multichain.xyz, or hop.exchange). This will allow Aave users to efficiently use their deposited collateral on multiple chain. Many people believe that the future of Ethereum transactions will need to be ‘multi-chain’ as gas prices continue to grow, and have created a massive barrier to entry for the users with smaller positions (gas is often times more expensive than the transaction itself!). Aave’s solution to rising gas is to create portals that essentially will allow users to withdraw their deposited collateral from the chain of their choice, or the chain that best fits the user’s needs! In order to fulfill this mission, Aave must first be implemented on various chains. Another advantage of this expansion for Aave would be the unique way that Metis DAO rewards protocols. Metis DAO kicks back 30% of gas fees spent by users on protocols, directly back to the protocol’s DAO (over time). This means that 30% of the gas fees spent on the Aave protocol will be returned to the Aave treasury!

Metis has agreed to work closely with Aave DAO to implement incentives for those that deposit into Aave via Metis Andromeda. This has not yet been established, but in the snapshot refers to possible airdrops or other incentives for

This proposal will act as a step in the right direction towards Aave’s vision/strategy for a multi-chain future, while also potentially introducing a new revenue source for the Aave DAO!

About Metis Andromeda:

Metis Andromeda was founded in 2019, with a mission to scale Ethereum via Optimistic Rollups. Metis launched their mainnet Andromeda rollup on November 15th, 2021. Since launch, Metis has accrued over $500M+ TVL. This shocking number is partly due to the incentives program that Metis has rolled out (Not financial advice - DYOR).

Metis would benefit greatly from the implementation of Aave due to Aave’s outstanding reputation as a ‘Defi Blue-Chip’. They would also benefit from the users that Aave has on multiple chains already!

Cons

Some cons of this proposal include launching into an underdeveloped blockchain too quickly, and potentially putting Aave users at higher risk than necessary. Optimistic rollups are considered to be 'experimental tech', and could potentially have vulnerabilities that may not be known today.

Recommendation:

I recommend that the Rabbithole community vote yes for Aave to integrate with Metis Andromeda.

Despite the risks associated with Optimistic rollups being in their infancy, I think that this is advantageous for the Aave DAO, Aave users, and the growth of the protocol. With that being said, I do believe that users should do their due-diligance before transferring funds over. However, I also believe that it is not Aave's responsibility to set risk parameters for their users (so long as they are not intentionally putting them in harms way). I believe denying anybody access to the option of an L2 is unwarranted, so long as there are no major security concerns present. This proposal appears to be very beneficial for all parties involved, including users! I believe that it is in the Rabbithole community’s best interest to support and continue to build relationships with all protocols we have worked with, and to continue to support their growth. This proposal seems to be well aligned with Aave’s future goals in regards to portals, while it also provides a platform for users to enjoy cheap and fast transactions.

Open Questions:

• Does Metis currently have a working fraud proof system?

  • Answered: Yes with additional security via L2-Rangers

• Does the Aave Safety Module cover losses on chains other than ETH mainnet?

• How do the existing security properties of Metis impact Aave v3, which will have cross-chain functionality?

• What does this vote actually require from a core dev team/resource standpoint for Aave, and are those resources better deployed elsewhere?

Feedback:

• I bridged some tokens over and have been playing with the DeFi options. Their roadmap for the next ~5 months is pretty ambitious. Some major progress in decentralising the network, DAO tooling, 'middleware' to help projects deploy rapidly, NFT bridge, order of magnitude plus reduction in fees... That said, I don't see the harm in AAVE staying on the sidelines until more of that is proved out. Which new users are you reaching and how are you offering anything they can't already do on Polygon? Perhaps Metis being a true L2 and not a sidechain is one point of difference, but I don't see any rush for an established platform like AAVE to deploy unless there are some incentives in play to do so.

• Super helpful, thanks! I agree that's a pretty ambitious roadmap for 5 months. It looks like they're offering a revenue share model with dApps that deploy on their rollup, so that would be the incentive from an Aave standpoint.

  Personally I'm a little wary of these projects that fork Optimism and launch a token. Optimism itself is still highly experimental tech. Projects that sort of gloss over that fact with a marketing strategy, including saying things like it's enterprise ready when there isn't even a live dispute mechanism, is a bit of a red flag to me.

  From an Aave governance standpoint think the question is whether to let new rollups use Aave deployment as a way to signal to users that their tech is safe. I think there's also questions around return on time for the core Aave team to deploy. Would also be interested in how the Safety Module applies to other chains/rollups, or if that's only for Ethereum mainnet.

• There are some incentives for Aave to deploy on Metis, such as:

  • Metis offers protocols 30% of all transaction fees used on platform, perpetually. This acts as an added source of revenue for Aave DAO.

  • Aave's vision for the future is multi-chain - and their approach to this is through something they call portals. These will act as a 'router' , where users of Aave are able to effectively deposit on one chain, and withdraw on another. Limiting chains is not in their best interest here.

  • If you recall Aave's launch on Polygon, their TVL skyrocketed due to the increased yields on Polygon. I will try to find a chart representing this (I believe it was last April?). The addition of Aave on Polygon was a pretty incredible site to see, and they gained a TON of new users doing so.

  • Metis has offered Aave users exposure to future airdrops, or liquidity incentives to optimize strategy on the Metis L2 (specifics on this will be determined at a later date.).

  • Metis, Aave DAO, and Aave users all win here in my opinion.

• Some perspectives from RH core:

  • security and credibility are top two considerations when deciding to work with protocols. Many of our users may be interacting with crypto for the first time, and we want them to have a safe, secure, and reliable experience. A lot of users look to us to help them distinguish high quality projects from lower quality ones. Seems we should only recommend our partners work with protocols we’d work with ourselves

  • we do not optimize for TVL at RH, this is a core value, so our decisions should focus on utility, learning, and experience for users and not how to increase the TVL of protocols (we’ve actually said no to Quests that we’re clearly optimizing for TVL.)

• I agree with all of these as benefits, and that deploying on Metis could be a win for all parties. My view is that it's just much more of a win for Metis, and that Aave bears the risk involved. I'm personally a little biased against this emerging L2 strategy of forking in-development code and launching a token. It's unclear to me if Metis actually has a live fraud proof verification system based on their docs. They have one Twitter post where they claim to, but I haven't found any resources that validate that. If they don't, there's basically no security model for the chain. I think from the RH governances standpoint, the framework question is whether these types of deployment votes end up being implicit endorsements of these forked chains.

• For reference:https://l2beat.com/?view=risk

• re: Aave on Metis, I understand wanting to be conservative with how we approach these proposals but just want to point out that we were intending to vote yes on deploying to Optimism which also doesn't have fraud proofs rn according to l2beat (if I'm understanding correctly) and both could submit an invalid state root. so that being the only reason that we vote one way or the other probably isn't consistent. on the other hand, I don't really understand why metis doesn't have fraud proofs since as far as I can tell they're still using OVM so they should be able to implement them right? Optimism only turned theirs off when they made the switch from evm compatible to evm equivalent.

• I think the Optimism team has a pretty strong and verifiable reputation in the space, which is why I'm personally more comfortable with that platform. Right now a lot of the L2s have highly centralized components where you need to trust the dev team to varying degrees (e.g., all of the top 6 L2s by TVL have upgradeable contracts), so I think reputation does matter.

• Wanted to supplement the Metis security conversation with a post from Vitalik today that gives an overview of security on different chains.https://old.reddit.com/r/ethereum/comments/sgd3zt/a_quick_reminder_of_what_shared_security_means/

• I don't agree with the security or reliability concerns here. Furthermore, it clearly states that diligence is needed on the protocol. I truly tried to remain objective in my description of Metis, and I personally disagree with RH attempting to set risk parameters for their users. Not sure what we are doing in Defi if we are not allowing users to make their own educated decisions based on information available - The information presented in this case does not endorse Metis in any way, and emphasizes additional research before using the Layer 2 chain. All blockchain technology can be considered 'experimental technology' and should be used with caution, after proper knowledge is acquired. Limiting users exposure to risk in the form of acting like it does not exist is fundamentally wrong, and could potentially have the opposite effect in the long run. Identifying the risk (as done above) and educating individuals on what that risk involves is by far the optimal route to take, as we attempt to break away from a system that is currently deciding monetary risk and policy for individuals. Just trying to stick to the Ethos here, I truly mean no disrespect to anybody whom may have a different opinion. If Metis or any team members had a known reputation of taking advantage of users, I would definitely agree. But I can not write a recommendation that states that I think users should vote one way or another because a group of people told me it is what I should tell them, despite having any concrete evidence that it is a clear security risk to them.

• I feel like implementing Metis into RH and voting for the growth of Aave via expansion to Metis are completely different things... Implementing Metis into RH would directly pose a risk to users as it still has many question marks surrounding it... But voting for Aave to deploy on Metis does not directly pose a risk to any user... I even agree that Metis has question marks surrounding its rollup, and would go as far as not recommending a new user try to bridge onto an un-established chain... But to vote in favor of not giving users the option because we deem it too risky does not seem like a good precedent to be setting.

• My view is we as RH metagovernance have a dual mandate: to be stewards of the protocols and communities that we represent, and to provide a voice for the everyday user. In this case, the everyday user on Metis definitely benefits from having an established, battle tested platform to access. My bigger concerns are on our responsibilities as Aave holders. I've been a "no" vote so far, but mainly because I'm trying to get more info on the following:

  • Does Metis currently have a working fraud proof system?

  • Does the Aave Safety Module cover losses on chains other than ETH mainnet?

  • How do the existing security properties of Metis impact Aave v3, which will have cross-chain functionality?

  • What does this vote actually require from a core dev team/resource standpoint for Aave, and are those resources better deployed elsewhere?

• I have found that Metis does in fact incorporate a bonding system. They also have an additional multi-party fraud detection system which is allegedly provides an additional layer of security (see: L2 Rangers) (Source:https://chaindebrief.com/what-is-metisdao-metis-its-underlying-technology-and-what-makes-it-better-than-other-l1s-and-l2s/)

  I assumed Aave safety module would cover that considering that comes from ecosystem reserve (which they’ll actually be earning additional fees in this instance) ^will look more into this, great question!

  I personally believe all resources used to expand aave to new chains is worthwhile for Aave, so I see low opportunity costs here - will find data to support .

• Execution Status: Executed

• Vote: Yes

• Community Vote

  • 23 Y

  • 4 N

• Pod Vote

  • 31Y

  • 1N