PDP 21: Migrate DAI and WBTC to Aave v2

Posted on behalf of the mStable ProtocolDAO

Summary

The mStable’s SAVE product consistently generates an attractive yield for its users. With the recent announcement from Aave to introduce liquidity mining into their lending protocol a new opportunity for the generation of a higher yield becomes available.

This PDP proposes to move DAI and WBTC to the Aave v2 lending protocol. DAI is currently deposited in Compound, while WBTC is not deposited in any lending protocol. This proposal seeks to increase the overall yield on interest bearing mAssets, due to higher yields on Aave v2 and in addition to make use of the liquidity mining to earn staked AAVE (a.k.a stkAAVE). The proceeds of that earned asset will go towards interest bearing mUSD (imUSD) and interest bearing mBTC (imBTC) asset holders. The exact handling of the earned stkAAVE will be specified in a future MIP.

Motivation

Aave announced to launch a liquidity mining program for its v2 protocol. This PDP seeks to increase the capital efficiency of the mStable’s SAVE product. The DAI that is currently in Compound will earn a higher yield in Aave and earn additionally the stkAAVE token.

WBTC is currently in no lending protocol deposited. The capital efficiency can be increased by depositing WBTC to Aave v2, earning a yield on the asset, and participating in the liquidity mining program to earn stkAAVE.

This will increase the yield that can be generated and mStable’s SAVE products become even more attractive to investors. This can have a positive effect on the overall TVL of the mStable’s ecosystem. In addition, this step would benefit the MTA token holders by extracting a portion of the additional yield and using the generated revenue in the Buyback&Make Strategy that was introduced with MIP-8.

Overall, this PDP seeks to increase yield, benefitting both the users of the mStable’s SAVE and MTA token holders.

MCCP

The full specifications can be read here.

Next Steps

Pending no significant changes to its content, this proposal will be taken to snapshot vote on Monday, 3rd May 2021. Voting will be open for a 5 days window to give adequate time for a concurrent discussion. Governors can change their vote at any time should the discussion sway their decision. We look forward to hearing what MTA token holders have to say and seeing how they cast their votes.

7 Likes

Keen! Lets do this asap :chart_with_upwards_trend:

4 Likes

Overall risk profile of the product remains the same (Aave is already in-scope), while expected yields go up? Seems like a fine change.

As an area of future work, it might be interesting to automatically move/balance between Compound and Aave as yields on those platforms shift, though the added smart contract complexity may not be worth it for the (hopefully) low frequency mStable would be making such moves over the course of the year.

2 Likes

All in favor of this, let’s get the ball rolling :))

2 Likes

Voting is now live: Snapshot

1 Like

I voted in favour of this proposal :ballot_box:

1 Like

In favor of this to take advantage of the Aave liq mining program

3 Likes