- Edited
Summary:
Deposit % of excess DAI treasury reserves into Aave to earn interest, increase runway, and develop strategic partnership with Aave
Background:
Currently, the Olympus treasury has been accumulating stablecoins and liquidity pool tokens to back future OHM emissions. Several proposals have been discussed to increase available runway by decreasing APY, locked staking, etc. This year in particular, stablecoin assets like DAI effectively expose the treasury to long-term depreciation via inflation of the US Dollar.
Abstract:
OlympusDAO can increase available runway and develop a strategic partnership with Aave by converting excess DAI treasury reserves to aDAI. Current APY for aDAI at the time of this proposal is 2.33% APY + 0.63% APR in stkAAVE rewards. Excess reserves in the treasury consist of $7M in assets (see contract here). Interest on aDAI is variable and natively rebases, which simplifies management of these assets.
Motivation:
For OlympusDAO to become the Decentral Bank for DeFi, the protocol needs to expand and integrate with as many DeFi blue-chips as possible. Particularly compelling are permission-less integrations which provide benefits to both protocols. This both reduces the complexity of integrations and the risk of unforeseen composability issues. Investing excess reserves with Aave is a solid first-step towards getting sOHM listed as collateral on Aave for lending/borrowing.
Risks:
• Aave protocol risk