title: Use IndexCoop’s AAVE to list FEI on Aave V2 Market
authors: Joey Santoro (@joey, Fei Protocol Founder), Brianna Montgomery (@Brianna, Fei Labs) Matthew (@Matthew_Graham) David (@oneski22)
This IIP requests the IndexCoop’s Aave voting rights to be used for the sole purpose of submitting an AIP and then separately for voting FOR listing FEI as a collateral asset on Aave V2.
FEI is one of the few truly decentralized stablecoins and is mostly backed by ETH. Fei Protocol’s PCV holds ~$970M, providing a 459% collateralization ratio for all circulating FEI. FEI’s total supply stands at $416M with $206M FEI controlled by the protocol and $210M FEI in circulation. FEI is within the top 10 largest stablecoins by total supply.
While relatively new, the FEI protocol and community have made significant progress on peg stabilization mechanisms. FEI remains one of the most liquid stablecoins, with more than $300M in liquidity available on Uniswap v2. Current liquidity dynamics enable $1MM trades with <0.95bps slippage from the Uniswap V2 pool.
Fei introduces a community-governed reserve-backed stablecoin that aims to achieve digitally-driven, governance-minimized central banking. Fei has created a new stablecoin that seeks to stabilize itself, not via IOU-based debt commitments, rather through a monetary peg-based policy on the basis of protocol-controlled reserves, currently valued at $970 million.
At the time of posting, the 7- day FEI volume on Uniswap V3 is $163M and $292M on Uniswap V2. In addition to the new volume and TVL that FEI would bring to the Aave ecosystem, FEI would provide Aave with diversification benefits, including another decentralized stablecoin.
The proposal calls for the addition of FEI to the Aave V2 market for supply and borrow only. That means there will be a 0% Loan to Value, 20% Reserve Factor, and the same slope curve as sUSD with Slope 1 of 4% and Slope 2 of 100%. The full details can be found on the Aave forums here.
Fei Protocol has advanced FEI by:
- Submitting an ARC on the governance forum,
- Completed a risk assessment
- Submitted a PR
- Completed a sentiment check via snapshot
- Incorporated feedback from the Aave community
If listed, FEI would be one of the most decentralized stablecoins on Aave. The Fei DAO can support FEI markets on Aave by providing FEI liquidity. Traders will have the ability to tap into the large FEI-ETH liquidity on Uni V2 ($310M) as well as any future protocol owned or incentivized liquidity pools.
Enabling FEI for lending on Aave would allow the $426M circulating FEI supply to be deposited into Aave, and would also allow Fei Protocol to use the protocol-controlled value (PCV) ($756M) to create highly liquid lending markets.
Fei Protocol provides approximately $18M DPI-FEI on-chain liquidity via Sushiswap after purchasing $10.1M of DPI on the 10th August 2021. The remaining $1M DPI, along with $1M FEI was deposited into the Index Coop Rari Fuse pool.
Once listing FEI on Aave V2, Fei Protocol would like nothing more than to provide the liquidity for the next round of leverage products. Fei Protocol can ensure there is sufficient liquidity for future leverage products. There is over $300M of TVL in the FEI-ETH pool on Uniswap V2 which is ideal for the iETH-FLI product.
DPI multi-sig wallet delegates the Aave voting power to an EOA controlled by IndexCoop’s Dev Team which then can be used for submitting the FEI proposal and moving FEI forward to a vote!
- Delegate IndexCoop’s Aave voting power to 0x7f4C5938AF9731e9feadc09C3FA782508198532E for listing FEI on Aave V2
- Do not delegate IndexCoop’s Aave voting power to 0x7f4C5938AF9731e9feadc09C3FA782508198532E for listing FEI on Aave V2
NOTE: There will NOT be separate snapshot vote, to decide how INDEX’s AAVE holdings will vote on the AIP should this IIP pass.
Copyright and related rights waived via CC0.