Aavegotchi

Author: Dr. Wagmi (16635) Quorum Requirement: 20% (9M) Vote Duration: 14 Days Reference Material: Aavegotchi DAO Treasury Report: https://docs.google.com/document/d/1u-hODswpYcLSJhCh4y6SNoR-17rClwenenmU71Ag9Og/edit#heading=h.2gazcsgmxkub

Aave Ethereum V3 DAI Market (https://app.aave.com/reserve-overview/?underlyingAsset=0x6b175474e89094c44da98b954eedeac495271d0f&marketName=proto_mainnet_v3)

Proposal Summary: This proposal suggests allocating 3,549,809 DAI from the Aavegotchi DAO Treasury to the Aave V3 Ethereum Market. With an average supply APR of 4.34%, this move aims to generate an annual yield of approximately $154,061, enhancing the DAO’s revenue through a stable, high-yield strategy. The proposal ensures over 500,000 DAI remains in the DAO’s Polygon wallet for ongoing initiatives, while the rest of the DAI is strategically supplied to Aave. All supplied DAI comes from the 25% post curve closure Treasury Allocation.

Proposed Porfolio Composition Assuming AGIP 103 Passes Proposed Portfolio USD Value GHST (0.904) 15017760.91 USDC 3756276 Supplied DAI 3549809 Unsupplied DAI 2337064 ETH (not yet purchased) 3000000

Benefits:

1. Passive Income: Leverages a stable, high-yield avenue for revenue generation without active management.
2. Flexibility: Easy entry and exit strategies for the supplied positions, offering liquidity management benefits.
3. Market Optimism: Positions the DAO to capitalize on the anticipated increased demand for stablecoins in an upcoming bull market.
4. Diversification: Broadens the DAO’s investment portfolio and protects our stablecoins against inflation by generating yield.

Risks:

1. Platform Dependence: Relies heavily on the Aave ecosystem and the stability of its smart contracts, introducing platform-specific risks.
2. Liquidity Constraints: Future proposals may require accessing funds from the supplied DAI if the Polygon treasury depletes, potentially affecting liquidity.
3. Market Volatility: Exposure to market fluctuations could affect the APR and overall returns.
4. Smart Contract Vulnerabilities: Despite Aave’s track record, the risk of smart contract bugs or exploits remains inherent in DeFi protocols.

The proposal represents a balanced approach to revenue generation and risk management, aiming to strengthen the Aavegotchi DAO’s financial position while maintaining operational flexibility.

Dr Wagmi