IIP-82: Use IndexCoop's AAVE holdings to list FEI on Aave V2

IIP: 82
title: Use IndexCoop’s AAVE to list FEI on Aave V2 Market
status: Proposed
authors: Joey Santoro (@joey, Fei Protocol Founder), Brianna Montgomery (@Brianna, Fei Labs) Matthew (@Matthew_Graham) David (@oneski22)
created: 2021-09-05

Simple Summary / Abstract

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.

About the Requestor

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.

Authors:

@Joey is the founder of Fei Protocol.
@Brianna is a member of the Fei Labs team.

Proposal Details

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:

Motivation

Benefits for Aave and the DeFi Ecosystem

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.

Benefits for Index Coop

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.

Specification

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!

Vote

FOR

  • Delegate IndexCoop’s Aave voting power to 0x7f4C5938AF9731e9feadc09C3FA782508198532E for listing FEI on Aave V2

AGAINST

  • 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

Copyright and related rights waived via CC0.

9 Likes

As a core contributor over at Fei, it would be a fantastic use of the metagovernance power that INDEX holds to help list FEI on Aave. Of course this is good for Fei Protocol, but also helps unlock new opportunities for FEI in the Index Coop ecosystem such as using aFEI in the next set of FLI products for example.

Excited to see more proposals like this coming through now that the community has further formalized the metagovernance proposal process!

7 Likes

Thank you @oneski22 , this looks good all round - for the protocols and the ecosystem. Will support.

2 Likes

@sixtykeys @mel.eth @Pepperoni_Joe requesting an IIP number on behalf of the FEI team, no vote yet.

4 Likes

As a member of the Fei Core Team with a focus on ecosystem development / business operations, I support this request and look forward to further cooperation with the IndexCoop community.

4 Likes

Requesting for a snapshot for Wednesday (September 8th) this week. @sixtykeys

1 Like

Hey @joey @Brianna @Matthew_Graham @oneski22, this IIP has been scheduled to go live on Wednesday, 8th September.
Snapshot here.

cc: @mel.eth

4 Likes

Confirming that this IIP has passed with 211.67k INDEX (99.7%) voting FOR. :white_check_mark:
Snapshot here.

1 Like

FEI has submitted the AIP here: Aave - Open Source Liquidity Protocol

In accordance with the language from the IIP quoted below, we will be voting FOR.

1 Like

Confirming that due to Fei having enough AAVE to make their own proposal (as they have done: Add FEI to Aave V2), it was determined that the easiest way to execute this IIP is to vote using using the typical/current metagov address 0x10F87409E405c5e44e581A4C3F2eECF36AAf1f92 (IIP-49) and NOT delegate to 0x7f4C5938AF9731e9feadc09C3FA782508198532E

1 Like

So executed

2 Likes

UPDATE: There are issues with the AIP submitted. We are working with @joey and team to assess the situation.

1 Like

I’ve summarized these issues here on the Aave forum: ARC: Add support for $FEI as a deposit currency - #31 by Joey-fei - New Asset - Aave

The current status of the proposal is that it is cancelled and we are awaiting re-delegation to re-propose. Big thank you to @oneski22 @gregdocter and the entire Index Coop community for patience and support on this proposal.

3 Likes

Looks like this is live again: Add FEI to Aave V2

What needs to happen now?

1 Like

Per IIP-82 we will be voting FOR.

Assuming no payload issues, this will be the end of the saga!

1 Like

Amazing :slight_smile: Never forget Murphy's law - Wikiquote

kk will coordinate with @dylan and confirm here once executed

1 Like

Vote executed :white_check_mark:

[meeting character count]

2 Likes