<hr />
<p>Title: Finance Nest - Autonomy to Act Amendment <span>#1</span><br />
Status: Propose<br />
Author: <a href="/u/Finance">@Finance</a>, <a href="/u/elliottwatts">@ElliottWatts</a> and <a href="/u/matthew_graham">@Matthew_Graham</a><br />
Created: 06/04/2022</p>
<hr />
<h1>
<a name="simple-summary-1" href="#simple-summary-1"></a>Simple Summary</h1>
<p>The Finance Nest has a strong track record and is one of the most advanced Treasury teams in Defi. This proposal presents the community the opportunity to expand Finance Nest remit and transition Finance Nest into a back office function. Building on <a href="https://gov.indexcoop.com/t/proposed-iip-123-finance-nest-autonomy-act/3646/6">IIP-123 <span>2</span></a> this proposal includes the ability to attain and manage a line of credit that will be used to support creating, growing and maintaining our products/business, and the ability for Finance Nest to manage any amendments to the signers on the Operations and Investment Account multisigs. This operational flexibility will help the community to realise our ambitious growth objectives.</p>
<p>The intent is to reduce operational burden and place more responsibility and trust in Finance Nest. Finance Nest will be transitioning more towards becoming a back office that can service the DAO autonomously with monthly forum status updates, replicating the success of the FLI pod.</p>
<h1>
<a name="abstract-2" href="#abstract-2"></a>Abstract</h1>
<p>Finance Nest seeks the approval of the community to extend the current guidelines/boundaries enabling the ability to act with more autonomy. This proposal expands the Finance Nest remit to amend the signers on the Operations and Investment Accounts and the added ability to utilise debt for growing the business. Do note, some of the icETH liquidity is already funded using over collateralized debt via Rari Fuse Pool 8 to support the product launch which is different to a line of credit facility.</p>
<p>Debt is a widely used and powerful tool that can be utilised to accelerate growth and provide operational flexibility for how capital is deployed. Finance Nest seeks to expand upon the Autonomy to Act remit to include the ability to attain lines of credit to support the growing Index Coop’s business. Any debt will be used to support growing the business both directly and indirectly through things like Protocol Owned Liquidity (POL) and through deploying capital into delta neutral strategies in order to acquire strategic assets which help us attain our growth ambitions.</p>
<h1>
<a name="motivation-3" href="#motivation-3"></a>Motivation</h1>
<p>In recent times, Index Coop has greatly increased the rate at which products are being launched. We expect this to continue and anticipate some of these products will require more capital to launch than today’s products in circulation. Protocol Owned Liquidity has absorbed all of our revenue as we continue to reinvest into growing the business.</p>
<p>Our growth ambitions are great and rather than try to juggle several different initiatives, Finance Nest recommends obtaining a line of credit to provide additional operational flexibility to the community. Key drivers for seeking the ability to attain a line of credit that provides extensive operational flexibility:</p>
<ul>
<li>Rate at which products are being launched is increasing</li>
<li>Product pipeline features several capital intensive products</li>
<li>Various delta neutral strategies within defi enable Index Coop to accumulate strategic assets</li>
</ul>
<p>As we increase the rate at which we create products, we need to scale our ability to launch and maintain those products. Currently, our revenue is not growing fast enough and we could use our stables but the opportunity cost of the stables exceeds the cost of debt. To support Index Coop’s growth ambitions we need to enable the business to pursue growth without unnecessary capital constraint.</p>
<p>With minimal financial engineering, Finance Nest will deploy several strategies that act to generate cash flow exceeding the cost of any debt. Essentially, Index Coop will have no price volatility risk, will be able to borrow debt at a lower interest rate than the yield we earn, thus making a profit. This is known as a delta neutral free-carry trade. We are essentially creating a self repaying loan which frees up capital to be deployed supporting various growth initiatives across the business. Ie: Some debt is used to generate an income to maintain and pay back the credit line, whilst other debt is directly invested into growth initiatives like POL.</p>
<p>In addition to the above, Finance Nest is proposing the responsibility of updating/maintaining who is an Operations and Investment Account multisig signer. Finance Nest has submitted many IIPs in effort to optimise the signers on the accounts to keep up with people coming and going from the DAO along with improving the responsiveness of the signers on the wallet. Rather than continue to present IIPs, Finance Nest intends to perform these tasks in the background and provide monthly updates on each account detailing any amendments to the signers or signer requirements. Please note the signer requirements are still to run through the IIP process, it is just the ability to change who is a signer will be passed to Finance Nest.</p>
<h1>
<a name="specification-4" href="#specification-4"></a>Specification</h1>
<p>This proposal builds upon the permission granted by the Index Council for Finance Nest to engage with other DAOs offering lines on credit within DeFi. There are a number of DAO bringing various debt offerings to DeFi and Index Coop has the ability to be a launch partner whilst also attaining much needed operational financial flexibility.</p>
<p>This proposal grants Finance Nest the ability to enter into agreements with other DAO for attaining a line of credit. All reporting will be via the monthly reports which are shared on the governance forum. This will be how Finance Nest communicates what are the loan terms, what is the debt is being used for, what is the return on investment and how this is contributing to Index Coop realising its ambitious growth targets.</p>
<p>Various DAO that are coming to market offer widely varying services with very different requirements. Index Coop has been for some time now engaging with several DAOs and is now approaching the late stages of discussion. Finance Nest did hope to have the line of credit in place by now, but hope to have it in place soon. This line of credit will bring the operational flexibility we need to grow at the rate we desire.</p>
<p>In scope parameters</p>
<ol>
<li>​​Type of collateral supporting the loan</li>
<li>Limit of exposure ie: Debt ceiling</li>
<li>Selecting counterparty / DAO(s)</li>
<li>Borrow and repay funds online</li>
<li>Agreeing to interest rate and fees</li>
<li>Terminating line of credit</li>
</ol>
<h1>
<a name="implementation-5" href="#implementation-5"></a>Implementation</h1>
<p>The Finance Nest gains the following autonomy:</p>
<ul>
<li>Ability to engage with other entities to create and manage a line of credit</li>
<li>Ability to deploy (deposit, transfer etc…) capital as required to support initiating and maintaining the line of credit</li>
<li>Ability to update signers on multisig as required</li>
<li>Reporting will be monthly via existing reporting channels</li>
<li>Reporting will detail how the funds are being used</li>
</ul>
<h1>
<a name="voting-6" href="#voting-6"></a>Voting</h1>
<p>FOR:</p>
<p>DO delegate additional autonomy to Finance Nest.</p>
<p>AGAINST:</p>
<p>DO NOT change the existing arrangement.</p>
<h1>
<a name="copyright-7" href="#copyright-7"></a>Copyright</h1>
<p>Copyright and related rights waived via <a href="https://creativecommons.org/publicdomain/zero/1.0/">CC0</a>.</p>

IIP-XY - Finance Nest Autonomy Act Amendment #1 
 Title: Finance Nest - Autonomy to Act Amendment

IIP-XY - Finance Nest Autonomy Act Amendment #1

Governance House 
 title: Governance House 
status: Discussion 
author:  @Matthew_Graham  
Created: 28-02-2022 
 
 
  Simple

Governance House

<p>Status: Proposed<br />
Author: <a href="/u/Finance">@Finance</a>, <a href="/u/matthew_graham">@Matthew_Graham</a> , <a href="/u/elliottwatts">@ElliottWatts</a>, <a href="/u/prairiefi">@prairiefi</a>, <a href="/u/hammad1412">@Hammad1412</a> &amp; <a href="/u/ahuja">@Ahuja</a><br />
Created: 10 January 2022</p>
<h1>
<a name="simple-summary-1" href="#simple-summary-1"></a>Simple Summary</h1>
<p>The Finance Nest consists of finance and risk experts with experience in TradFi asset management, Big4 financial service accounting and DAO treasury management. We are a group of people that have a strong track record which has demonstrated the required skill and qualities to be able to make key decisions on treasury management and finances at the Index Coop.</p>
<p>After topping the IIP count last year, we are asking the community for more autonomy to act in the community’s best interests, allowing for more streamlined execution which is essential to scaling and growing the DAO operations. We have identified challenges within the current construct we wish to overcome and we believe, as much as everyone loves a good IIP, the community would prefer a few less from Finance Nest.</p>
<h1>
<a name="abstract-2" href="#abstract-2"></a>Abstract</h1>
<p>Finance Nest seeks the approval of the community to extend the current guidelines/boundaries enabling the ability to act with more autonomy. As the DAO moves closer towards creating nests with clearer roles and responsibilities, as outlined <a href="https://gov.indexcoop.com/t/index-2-0-leadership-governance-and-decision-making-pods-nest-and-wise-owls/3214">here</a>, Finance Nest requests delegation of decision making power to those with the most context on the subject matter. Finance nest has built trust, has an on-chain and governance forum track record of demonstrating the ability to execute with the community’s interest front of mind. Finance Nest is leading the nest movement and provides several periodic reports providing insight into ongoing DAO financial operations.</p>
<p>However, recently we have had three distinct issues whereby the IIP process has caused hesitation or prevented swift intervention to rectify the situation. These emerging situations create a risk for our community and Finance Nest wants to help by being empowered to act swiftly.</p>
<p>This proposal delegates the ability to Finance Nest to perform a number of day to day type operations in a more autonomous manner as well as providing some much needed crisis management functional support. With more autonomy, streamlined decision making and ability to act in crisis situations, the Finance Nest can serve the community better. The Finance Nest will continue to provide periodic updates on the governance forum, host the Money Talks discussion each week in Discord which will be structured in such a way as to give an update to the community along with fielding any questions that may arise as a result.</p>
<h1>
<a name="motivation-3" href="#motivation-3"></a>Motivation</h1>
<p>In recent times, there have been three clear incidents whereby the ability to act in the interest of the community was dampened by the existing construct.</p>
<ul>
<li>Product launch seed liquidity (x2)</li>
<li>Product drifting from NAV (x1)</li>
</ul>
<p>In each of the three instances mentioned above, hesitation and technicalities relating to the governance process caused significant delay and unwanted attention. Discussions focused around if the community’s funds should be used to bridge the funding gap or used to arbitrage a product back to NAV before causing significant issues for various DeFi integrations. Index Coop has provided liquidity for two products to ensure smooth launches and with respect to arbitraging a product back to NAV, this was executed by individuals with their own capital.</p>
<p>In time the Liquidity Pod will have an approved budget, which is great. However, the lesson learned here is that the Finance Nest needs the ability to act with more autonomy without the risk of undermining the governance process.</p>
<p>The Finance Nest has demonstrated ability through the following IIPs to act in the communities best interest:</p>
<ul>
<li><a href="https://gov.indexcoop.com/t/iip-70-create-a-stablecoin-reserve-within-the-operations-account/2210">IIP-70: Create a Stablecoin Reserve Within the Operations Account</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-99-update-operations-account-multi-sig-2/3044">IIP-99: Update Operations Account Multi-sig #2</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-111-create-an-operations-account-on-polygon-network/3247">IIP-111: Create an Operations Account on Polygon Network <span>1</span></a></li>
<li><a href="https://gov.indexcoop.com/t/iip-112-update-investment-account-multisig/3251">IIP-112: Update Investment Account Multisig</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-114-transfer-usdc-from-treasury-to-the-investment-account-and-deploy-productively/3275">IIP-114: Transfer USDC from Treasury to the Investment Account and Deploy Productively</a></li>
</ul>
<p>As the community scales and grows, we need to implement an operating standard that ensures community funds are managed and deployed in a secure and efficient manner. This enables all members the ability to deploy or request that capital be deployed from the Operations Account into any protocol on the whitelist knowing sufficient due diligence has been performed. All deployments of community funds in size should be IIP approved and/or fall within guidelines published on the governance forum.</p>
<p>Examples of guidelines published to date:</p>
<ul>
<li>
<a href="https://gov.indexcoop.com/t/stablecoin-asset-management-guidelines/2099">Stablecoin Asset Management Guideline</a>s</li>
<li><a href="https://gov.indexcoop.com/t/twg-investment-account-philosophy/1564">TWG - Investment Account Philosophy <span>1</span></a></li>
<li><a href="https://gov.indexcoop.com/t/investment-account-strategy-details/2792">Investment Account - Strategy Details <span>1</span></a></li>
</ul>
<p>Currently, there is no approval list or standard approach to how/where community funds can be deployed. Creating a whitelist with guidelines around how to be added to the whitelist solves for this. As we can see from the list of IIPs below, they are all in different formats and the information is scattered across the governance forum. The community will benefit from having a github directory displaying the whitelist of approved protocols.</p>
<ul>
<li><a href="https://gov.indexcoop.com/t/iip-79-authorize-the-operations-account-for-aave-balancer-compound-and-pooltogether-strategies/2402">IIP-79: Authorize the Operations Account for Aave, Balancer, Compound, and Pool Together Strategies</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-97-authorize-the-operations-account-for-beta-finance-rari-capital-strategies/2976">IIP-97: Authorize the Operations Account for Beta Finance &amp; Rari Capital Strategies</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-101-authorize-the-operations-account-for-rari-capital-strategies/3076">IIP-101: Authorize the Operations Account for Rari Capital Strategies</a></li>
<li><a href="https://gov.indexcoop.com/t/proposed-iip-109-deploy-protocol-owned-index-eth-liquidity-into-managed-visor-vault-on-uniswap-v3/3238">IIP-109: Deploy Protocol-Owned INDEX/ETH Liquidity into Managed Visor Vault on Uniswap v3</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-115-authorize-the-investment-account-for-aave-compound-balancer-element-finance-notional-strategies-ribbon-finance-and-mstable/3279">IIP-115: Authorize the Investment Account for Aave, Compound, Balancer, Element Finance, Notional Strategies, Ribbon Finance and mStable</a></li>
</ul>
<p>This whitelist provides a much needed layer of security ensuring Finance Nest and others alike only acts within the bounds defined by the community. This reduces the possibility of the community losing funds or transactions directing funds beyond the approved list being processed. If the protocol is not on the whitelist, then this gives signers the ability to question a transaction in an easy and effective manner.</p>
<h1>
<a name="specification-4" href="#specification-4"></a>Specification</h1>
<h2>
<a name="operation-investment-accounts-5" href="#operation-investment-accounts-5"></a>Operation &amp; Investment Accounts</h2>
<p>This proposal enables Finance Nest the ability to create Operations and Investment Accounts with the same list of signers across all networks. This is needed to support the deployment of FLI products on various networks and enable Finance Nest to act quickly. The risk becomes that if <a href="https://gov.indexcoop.com/t/iip-xy-delegate-fli-launch-decisions-to-pwg-dfp-on-a-per-chain-basis/3599/3">FLI products can launch without IIPs</a>, then Finance Nest needs the ability to act at the same speed and with similar delegation of authority. Capital can be moved between various accounts at the discretion of the Finance Nest and will only be deployed into protocols on the community’s protocol approved whitelist.</p>
<p>Do note any changes to the signers will still run through the IIP process. We do not want a situation to occur where people can be added for the sole purpose of facilitating faster transactions. Rather we encourage the correct multisig structure and signer requirements to protect community funds.</p>
<p>Finance Nest will be creating guidelines outlining best practices for creating various multisig Gnosis Safes across the DAO. This guideline will be the standard that that community discusses and then implements. Some of the things to be included are shown below:</p>
<ul>
<li>Number of signers required depending on level of capital within the account</li>
<li>Signers per Nest - specifies number of signers from a specific nest</li>
<li>Capital holding levels</li>
<li>Interaction with the whitelist</li>
<li>How to appropriately document transactions</li>
</ul>
<p>The initial guidelines for discussion will be published on the forum in the coming weeks…</p>
<h2>
<a name="crisis-management-6" href="#crisis-management-6"></a>Crisis Management</h2>
<p>This proposal enables Finance Nest the ability to use community funds within the Operations Account to support Index Coop products when crises emerge without the need to go through the IIP process. The Index Coop Council (ICC) will be kept informed in real time and events will be either reported via a standalone forum post or the next Operations Account publication. For significant events whereby we need to deviate from white lists or large amounts of capital will have to be deployed, an open discussion will be held with the ICC and Finance Nest advice given on the best course of action. In this type of scenario we will follow best practices like those displayed by Aave with respect to <a href="https://app.aave.com/#/governance/44-QmNVWrrm3ieyRRVD4f77zdxrvSUj1W4HDCojLKNcxmVQhr">AIP-44</a> and on the <a href="https://governance.aave.com/t/aip-44-discussion/5965">governance forum</a> as events unfolded.</p>
<p>A recent example of this was when a product drifted 10% from Net Asset Value (NAV), the Operations Account could have been used to arbitrage the product back to NAV. Instead individuals performed arbitrage trades with their own capital. Please note, there is now an IC controlled/affiliated bot now arbitraging the pool back to NAV. This is an example of an unanticipated need to act and by not having access to the Operations Account capital it caused delays, indecision and in the end alternative solutions had to be found. We seek to avoid being in this predicament if something like this ever happens again.</p>
<h2>
<a name="approve-request-funding-from-the-treasury-account-7" href="#approve-request-funding-from-the-treasury-account-7"></a>Approve &amp; Request Funding from the Treasury Account</h2>
<p>The Funding Council’s responsibility to request quarterly funding has been passed to <a href="https://gov.indexcoop.com/t/index-2-0-our-future-of-finance/2969">Finance Nest through the INDEX 2.0 process.</a> With the ICC being formed in recent months this group has been given the delegated authority on a number of matters, one being the ability to approve quarterly Nest budget funding requests, examples shown below. The Finance Nest, upon receiving an ICC approved budget, seeks the ability to request funds from the community Treasury without the need to go through the IIP process. Finance Nest seeks the autonomy to request quarterly funding without IIP.</p>
<p>We can see below the IIP’s proposed for quarterly funding since genesis, all which have passed with no resistance.</p>
<ul>
<li>
<a href="https://gov.indexcoop.com/t/iip-4-create-a-treasury-committee/190">IIP-4 Create a Treasury Committe</a>e</li>
<li><a href="https://gov.indexcoop.com/t/iip-10-treasury-committee-grant-2/373">IIP-10 Treasury Committee Grant #2</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-21-treasury-committee-grant-3/1067">IIP-21 Treasury Committee Grant #3</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-59-funding-council-grant-4/2033">IIP-59: Funding Council Grant #4</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-94-funding-council-grant-5/2944">IIP-94: Funding Council Grant #5</a></li>
<li><a href="https://gov.indexcoop.com/t/iip-85-temporary-funding-council-decision-making/2668">IIP-85 Temporary Funding Council Decision Making</a></li>
</ul>
<p>This will allow the Index Coop to remain well funded without significant delay due to the governance process. This also means we can discretionary request smallers transfers more frequently rather than all at once. The key is to have enough INDEX &amp; USDC to support short term operational needs and to operate within the ICC defined budget published quarterly on the governance forum. Finance Nest will still need to request USDC from the Treasury to the Investment Account ( non Operational needs ) in line with the current IIP process.</p>
<h2>
<a name="manage-revenueasset-mix-8" href="#manage-revenueasset-mix-8"></a>Manage Revenue/Asset Mix</h2>
<p>As the DAO grows we expect to see an increasing need to more actively manage our capital. This is especially the case for FLI product revenue streams, numerous other product revenue streams and our stablecoin reserves, as we are likely to reward more contributors with stables going forward.</p>
<p>As the Operations Account receives inflows of various assets and accommodates outflows in various assets, Finance Nest requests to formally recognise the ability to manage the composition of the Operations Account to suit operational needs. This includes the ability to swap assets to suit the cost base, reduce leverage exposure to match a desired risk profile, etc… A prior IIP detailing approval to sell FLI periodically to ETH is shown below.</p>
<ul>
<li><a href="https://gov.indexcoop.com/t/iip-87-transfer-fli-products-in-treasury-to-operations-account/2444">IIP-87: Transfer FLI Products in Treasury to Operations Account</a></li>
</ul>
<p>We do note that all INDEX sales need to go through the IIP process. Something as sensitive as selling INDEX large amounts of INDEX ( ≥50,000 USD ) needs to and will continue to be approved via the IIP process. Currently, only day to day operations whereby INDEX is sold on a decentralized exchange to then make payments occurs. As the Operations Account offers Nest all kinds of tokens, we do not see a need for any Nest/Pod to be swapping large amounts of INDEX for any other token.</p>
<p>Community capital will always be managed in line with the respective published guidelines.</p>
<h2>
<a name="whitelist-protocol-fund-deployments-9" href="#whitelist-protocol-fund-deployments-9"></a>Whitelist - Protocol Fund Deployments</h2>
<p>The whitelist is only applicable when depositing sums of capital ≥50,000 USD into contracts belonging to the same protocol. Essentially, if anyone wants to deposit $50K or more into a singular protocol ( one or more smart contracts ) then the protocol must be on the whitelist. $50K was selected as a nominal number. For values less than $50K, there are no guide rails and discretion falls to the respective budget owner.</p>
<p>Creating an IIP to add a protocol to the whitelist is open to everyone and the forum can discuss the associated risks. Once added to the whitelist, everyone in the community knows the protocol has been deemed safe and can trust the process for how the protocol was added to the list.</p>
<p>Finance Nest will maintain the whitelist via the github directory and provide the templates supporting the IIPs amending the whitelist. Risk analysis can be performed via the governance forum, for all to discuss, with guidance found on github detailing how to think about smart contract risks. This will be in a similar fashion to how Aave assesses new asset listings.</p>
<p>To bring the whitelist in line with our current and near term operational needs the following additions are to be added Uniswap, Sushiswap, TokenSets, Visor, Gelato and Tesr Finance.</p>
<p>With <a href="https://gov.indexcoop.com/t/proposed-iip-109-deploy-protocol-owned-index-eth-liquidity-into-managed-visor-vault-on-uniswap-v3/3238">IIP-109</a> passing the snapshot vote, do note this whitelist approval only covers Visor’s Private Pools and excludes Visor public pools which have a <a href="https://gov.indexcoop.com/t/proposed-iip-109-deploy-protocol-owned-index-eth-liquidity-into-managed-visor-vault-on-uniswap-v3/3238/27">poor safety record</a>. Gelato has been added to provide alternative functionality for future product launches.</p>
<p>Tesr Finance is a yield farming protocol on Polygon and expected to launch on other L2. Tesr vaults are designed to generate yield using the best yearn strategies adapted for Polygon. Vaults are capital pools that automatically generate yield based on opportunities present in the market. Vaults benefit users by socializing gas costs, automating the yield generation and rebalancing process. The vault management fee is 2% and it represents a flat rate taken from vault deposits over a year. The performance fee is 20% and is deducted from the yield earned every time a vault harvests a strategy.</p>
<h1>
<a name="implementation-10" href="#implementation-10"></a>Implementation</h1>
<p>The Finance Nest gains the following autonomy and ability to act:</p>
<ul>
<li>Create Operations and Investment Account Wallets with the current signer configurations</li>
<li>Enable the use of funds from the Operations Account during times of crisis</li>
<li>Autonomy to request funding from the Treasury Account</li>
<li>Manage revenue/asset mix to meet capital needs within the Operations Account</li>
<li>Create and maintain a Whitelist of protocols for capital deployments ≧ 50,000 USD per protocol</li>
<li>Ability to manage assets within the Operations and Investment Account in line with published guidelines</li>
</ul>
<h1>
<a name="voting-11" href="#voting-11"></a>Voting</h1>
<p>FOR:</p>
<p>DO delegate more autonomy to Finance Nest and create a Whitelist as detailed above.</p>
<p>AGAINST:</p>
<p>DO NOT change the existing arrangement.</p>
<h1>
<a name="copyright-12" href="#copyright-12"></a>Copyright</h1>
<p>Copyright and related rights waived via <a href="https://creativecommons.org/publicdomain/zero/1.0/">CC0</a>.</p>

PROPOSED: IIP-123 - Finance Nest Autonomy Act Status: Proposed 
Author:  @Finance ,  @Matthew_Graham  ,  @ElliottWatts ,  @prairiefi

PROPOSED: IIP-123 - Finance Nest Autonomy Act

<hr />
<p>title: [Proposal] Strategic Partnership with Aave DAO<br />
status: Proposed<br />
author: Llama Community - <span>@MatthewGraham</span><br />
created: 20-04-2022</p>
<hr />
<h1>
<a name="simple-summary-1" href="#simple-summary-1"></a>Simple Summary</h1>
<p>Aave DAO would like to present the Balancer community the opportunity to swap 200,000 BAL for AAVE. The price is to be determined by the 90-day moving average when an AIP is presented for voting via Aave’s governance process, [1].</p>
<h1>
<a name="abstract-2" href="#abstract-2"></a>Abstract</h1>
<p>With a successful Balancer Snapshot vote, an AIP will be presented for the Aave community to vote on. If passed, the contracts will be deployed enabling 200,000 BAL tokens to be deposited and the AAVE held within withdrawn. After the tokens are withdrawn, each community is able to use the newly acquired tokens without restriction.</p>
<p>Aave intends to deposit BAL, with matching ETH, into the 80/20 BAL/ETH pool and then deposit the receipt token into the vested escrow contract, locking them for 1 year. The veBAL voting influence is to be used for directing BAL incentives to liquidity pools that create TVL or provide a backstop for Aave markets, [2].</p>
<p>A separate forum post will emerge requesting the Aave Reserve Factor address be added to the Voting Escrow contract whitelist.</p>
<h1>
<a name="motivation-3" href="#motivation-3"></a>Motivation</h1>
<p>Aave and Balance have a long history of working together. The AAVE/ETH (80/20) Balancer V1 pool BPT is accepted within the Aave Safe Module and the newly created Balancer Boosted Pools drives TVL to Aave V2 market, [3]. In time, Aave intends to upgrade the Safety Module from 80/20 AAVE/ETH pool on Balancer V2. There are many more opportunities for both communities to work together and a tokenswap only further strengthens this relationship.</p>
<p>Aave’s veBAL voting influence can be used to vote BAL rewards to Balancer Boosted Pools which utilise Aave markets in the background to create yield for passively held liquidity, [4]. There are likely to be many more Balancer Boosted Pools that utilise aTokens in the future and the veBAL votes can be used to help bootstrap these pools by directing BAL rewards to those pools. Bootstrapping these pools benefits both communities and only strengthens the already strong relationship.</p>
<p>By exchanging AAVE for BAL, the tokenswap reflects the ongoing collaboration and shared vision through governance in each other’s community. Using data from Etherscan, the tokenswap is significant enough for Aave to become just outside of the Top 50 BAL tokens holder and for Balancer to become a Top 80 AAVE holder, [5,6]. Both communities will have influence in the other’s governance process and be aligned through ownership to collaborate in growing the adoption of both protocols.</p>
<p>The initial sizing of 200,000 BAL was reached by attaining input from some members of the Balancer community. The tokenswap is also the same size as the recent Tribe DAO and Balancer DAO token swap, [7]. In addition to the tokenswap outlined here, the Aave community is also considering purchasing an additional 100,000 BAL via a bonding curve on market, [8]. This is a separate proposal and is still in the discussion phase on Aave’s governance forum.</p>
<h1>
<a name="implementation-4" href="#implementation-4"></a>Implementation</h1>
<p>The tokenswap is to be performed by both Balancer and Aave by depositing tokens into a contract like how Tribe DAO swapped TRIBE for INDEX, [9].</p>
<p>Upon withdrawing AAVE from the contract, the Balancer community can deploy the holding without restriction from this proposal.</p>
<p>Both organisations can at any moment terminate the agreement through their respective governance systems.</p>
<h1>
<a name="references-5" href="#references-5"></a>References:</h1>
<p>[1] <a href="https://governance.aave.com/t/arc-strategic-partnership-with-balancer-part-1/7617">ARC - Strategic Partnership with Balancer Part #1 - General - Aave <span>2</span></a><br />
[2] <a href="https://forum.balancer.fi/t/introducing-vebal-tokenomics/2512">Introducing veBAL tokenomics <span>2</span></a><br />
[3] <a href="https://pools.balancer.exchange/#/pool/0xc697051d1c6296c24ae3bcef39aca743861d9a81/">Pool management - Balancer <span>1</span></a><br />
[4] <a href="https://app.balancer.fi/#/pool/0x7b50775383d3d6f0215a8f290f2c9e2eebbeceb20000000000000000000000fe">Balancer</a><br />
[5] <a href="https://etherscan.io/token/0xba100000625a3754423978a60c9317c58a424e3d#balances">$15.79 | Balancer (BAL) Token Tracker | Etherscan</a><br />
[6] <a href="https://etherscan.io/token/0x7fc66500c84a76ad7e9c93437bfc5ac33e2ddae9#balances">$186.13 | Aave Token (AAVE) Token Tracker | Etherscan</a><br />
[7] <a href="https://tribe.fei.money/t/fip-90-fuse-boosted-usd-balancer-pool-bb-f-usd/4023">FIP-90: Fuse-boosted USD Balancer pool (bb-f-usd) - Proposals - Tribe <span>1</span></a><br />
[8] <a href="https://governance.aave.com/t/arc-strategic-partnership-with-balancer-part-2/7813">ARC - Strategic Partnership with Balancer Part #2 - Governance - Aave <span>2</span></a><br />
[9] <a href="https://app.aave.com/reserve-overview/?underlyingAsset=0xae7ab96520de3a18e5e111b5eaab095312d7fe84&amp;marketName=proto_mainnet">https://app.aave.com/reserve-overview/?underlyingAsset=0xae7ab96520de3a18e5e111b5eaab095312d7fe84&amp;marketName=proto_mainnet <span>2</span></a></p>
<h1>
<a name="copyright-6" href="#copyright-6"></a>Copyright</h1>
<p>Copyright and related rights waived via <a href="https://creativecommons.org/publicdomain/zero/1.0/">CC0</a>.</p>

IIP-XY - Finance Nest Autonomy Act Amendment #1

Governance House

PROPOSED: IIP-123 - Finance Nest Autonomy Act

[Proposal] Strategic Partnership with Aave DAO

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