Aave

Simple Summary

Enabling a new Aave ClinicSteward smart contract, with capabilities to liquidate and repay non-healthy positions. The contract will utilize Aave Collector funds for the repayment.

Motivation

Since the initial Aave v3 activation three years ago, due to the nature of liquidations, the system has accrued a minimal bad debt of approximately $400’000.

This amount is pretty irrelevant in comparison with the ~$12 billion outstanding borrowings, but given the imminent activation of the Umbrella system (to automatically cover bad debt), and the recent upgrade of Aave to v3.3 (formally accounting for deficit/bad-debt post-liquidation), we believe it is appropriate to raise a proposal to clean the “legacy” bad debt, and this way start with clean accounting.

The Aave ClinicSteward is a smart contract that simply facilitates for a permissioned entity to execute the clean-up on behalf of the DAO, by authorizing a constraint budget from the Aave Collector for exclusive usage on liquidations/repayments of unhealthy positions (liquidatable).

Specification

The Stewards were deployed with the following configuration:

• the governance executor lvl1 was granted the DEFAULT_ADMIN role on each network
• a multisig with 2/3 multisig with ACI/TokenLogic/Karpatkey as signers was granted the CLEANUP_ROLE admin

The proposal:

• grants the ClinicSteward the FUNDS_ADMIN role in the Aave DAO.
• grants an EOA/Bot controlled by ACI the CLEANUP_ROLE to cleanup debt on behalf of the Aave DAO.

The stewards themselves implement a $ cap, which is pre-configured to the following amounts:

• Ethereum core $30’000
• Ethereum prime $5’000
• Polygon $30’000
• Avalanche $350’000
• Arbitrum $60’000
• Optimism $5’000
• Base $15’000
• Metis $1’000
• Gnosis Chain $1’000
• BNB Chain $2’000
• Scroll $1’000
• ZKSync $1’000
• Linea $1’000

References

• Implementation
• Test
• Snapshot
• Discussion
• Steward Code
• Audit

Copyright

Copyright and related rights waived via CC0.