{"title":"AIP 5: Adding CRV to Aave","shortDescription":"Aave governance proposal to enable CRV as a base asset","description":"---\naip: 5\ntitle: Adding CRV on AAVE\nstatus: \nauthor: @charlie_eth and @bneiluj\ndiscussions: https://governance.aave.com/t/listing-proposal-add-crv-curve-dao-token/1395\ncreated: 14.12.2020\nupdated: \n---\n\n## AIP rationale\n\nCurve is an exchange liquidity pool on Ethereum designed for extremely efficient stablecoin trading. It is the second biggest DEX on Ethereum and the third biggest protocol by TVL.\n\n## References \n\n- Forum proposal and poll \nhttps://governance.aave.com/t/listing-proposal-add-crv-curve-dao-token/1395\nhttps://governance.aave.com/t/proposal-add-support-for-crv-curve-dao-token/774\n\n- Project: https://www.curve.fi/\n- whitepaper: https://www.curve.fi/stableswap-paper.pdf\n- document portal, \nhttps://curve.readthedocs.io/en/latest/\n- source code for the system(s) that interact with the proposed collateral: https://github.com/curvefi/curve-contract, https://github.com/curvefi/curve-dao-contracts\n- Ethereum addresses contracts: https://www.curve.fi/contracts\n- audits both procedural and smart contract focused: https://www.curve.fi/audits\n- communities:\n\n* Telegram: https://t.me/curvefi\n* Twitter: https://twitter.com/curvefinance\n* Discord: https://discord.gg/rgrfS7W\n* Youtube Channel: http://www.youtube.com/c/CurveFinance\n\n## Paragraph Summary \n\nCurve is an exchange liquidity pool on Ethereum designed for extremely efficient stablecoin trading. It is the second biggest DEX on Ethereum and the third biggest protocol by TVL.\nThe CRV token is a governance token which also allows liquidity providers to boost their rewards on the platform as well as receive a share of trading fees on the Curve platform. Curve has recently reached over $10B in cumulative volume.\nUsers who vote lock their tokens (CRV => veCRV) receive a share of trading fees on the platform as well as a boost on their provided liquidity.\n\n## Motivation \nShort description of the proposed technical solution\n\n### Specifications \n\n1. What is the link between the author of the AIP and the Asset? \n\nTeam member/llama master\n\n2. Provide a brief high-level overview of the project and the collateral token \nSee Summary\n\n3. Explain positioning of token in the AAVE ecosystem: which market? \n\nThe asset will be listed in the current AAVE V2 market.\n\n4. Provide a brief history of the project and how it overcame stressed conditions \n\nCurve was created in early 2020 and was the second protocol to reach $1B in TVL. It is currently the second biggest DEX on Ethereum.\n\n5. How is the asset currently used? \n\nLending/governance/profit sharing\n\n6. Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity) \n\nhttps://www.coingecko.com/en/coins/curve-dao-token#markets\n\n7. Social channels data (Size of communities, activity on Github) \n\nLinks above\n\n8. Risk Assessment and Parameter suggestions \n\nHere is an analysis based on Aave’s Asset Risk Framework 3 to quantify CRV’s risks and the resulting model parameters suggestions\n\n## CRV’s Overall Risk is B-\n\n

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\n\nThe table below shows the key metrics used for the analysis as well as the risk scores using data from CoinGecko as of 15/12/2020\nCRV is the governance token of the Curve DAO behind the Curve Stablecoin Exchange the third biggest DEX on Ethereum with $1B of TVL. Curve offers an optimised model for stablecoin trading and revenue sharing incentives with fees from the >$10B in cumulative trading volume\n\n## CRV Smart Contract Risk: B-\nCRV token was introduced to Curve in August 2020 through liquidity mining. The code has 3 audits from ToB, Quantstamp and MixBytes. It is central in the DAO operations enabling stakers to vote and boost their yields with the locking of CRV. This model has generated half a billion transactions in half a year, with around 15,000 holders\n\n## CRV Counterparty Risk: B\nThe Curve DAO operates as a fully decentralised organisation with community proposals and votes. The ecosystem is funded by fees of the Curve Exchange generated by the $40m of daily volume\n\n## CRV Market Risk: C\nCurve is one of the leading DeFi projects. The token is available on top exchanges with nearly $100m market capitalisation and nearly as much average daily volume though a large share of CRV’s supply is locked. CRV experienced volatility in the last month with the rest of the market having yet to recover\nCRV’s risk profile is close to YFI’s leading to the same model parameters\n\n## Risk Parameters\n\n- LTV 40%\n- Liquidation Threshold 55%\n- Liquidation Bonus 15%\n- Reserve Factor 20%\n\n## Variable Interest Rate Model\n\n

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\n\n\nCRV fits the profile of a collateral asset, with the need for a conservative borrow rate model with a low optimal utilisation to protect collateral liquidity\n\n- UOptimal 45%\n- R_0 0%\n- R_s1 7%\n- R_s2 300%\n\n### Code \nThe code is part of the standard Aave protocol deployment (the AToken, Debt tokens and interest rate strategy) therefore no audits are needed. The code can be found here https://github.com/aave/protocol-v2/tree/master/contracts/protocol/tokenization\n\n### Test Cases \nBeing a standard ERC20, the Aave protocol test cases already cover everything needed to support CRV.\n\n### Security Considerations\nThe CRV token doesn’t have any specific behavior (eg. rebasing, balance increasing) and doesn’t offer meta governance functionalities since it requires locking to participate in the governance. Therefore, the standard AToken contract and corresponding debt tokens, already used for the majority of assets listed in Aave, can be also used for CRV. No auditing of the code is required.\n\n"}