rwAave

We propose to leverage Aave V3 technology, the most forked lending primitive, to deploy an opinionated new market optimized for RWAs, capitalising on the versatility of Aave V3, to maximise capital efficiency. More specifically rwAave focuses on:

• Tokenized Securities as Collateral: Offering stable, investment grade and high-yield opportunities.
• Capital Efficiency: with solely borrow or collateral assets, eliminating the need for liquidation liquidity
• Enhanced Stability for GHO & Aave Liquidity: through diversification

With regards to market stability TBills show standard deviation of just .63% in 3 years and are correlated to USD, giving our market a low liquidation risk, even with high loan-to-value ratios. The Chainlink's decentralized IB01/USD price feed, ensures accurate pricing based on the underlying asset of the underlying ETF which boast $12B TVL and substantial market depth, safeguarding against price manipulation. This unlocks looping strategies, as long as the GHO borrowing cost, is below the LTV adjusted TBILL Yield enables leveraged interest rates up to 15-30% as you can see in the simulations while keeping risks low

Significant benefits or Aave DAO: ● Market Expansion: Drawing from MakerDAO's success, integrating more RWAs can significantly increase Aave's market size. It also caters to risk averse users. This market could directly compete with the recently launched Morpho Blue and upcoming Euler V2 ● Resilience: as having a stable and resilient collateral base like TBills can greatly reduce the impact of market downturns As shown in the Chaos Labs Dashboard there’s $35M GHO in circulation backed by $107M, of which less than 3% are stables Let’s consider a sudden 50% market crash, similat to Black Thursday 2020. GHO’s collateral value would fall to $55M bringing the collateralisation from 307% to just 150%, with $10M of liquidations While rwAave would be unaffected This Resilience can be amplified to GHO’s peg by listing other stablecoins as borrow options, enabling price and rate arbitrage, especially when combined with eMode. ● But this also brings significant revenues to the DAO, with a 90% LTV TBill-backed GHO generates substantial annual income for the DAO, between $300k-450k per $10M of GHO depending on the minting rate

● Deployed GHO ● Deployed rwAave: a new Aave V3 market and GHO facilitator ● Deployed a listed Midas’ tokenized TBILL, currently yielding 5.5%, as a primary collateral option ● Deployed the interface ● Ran looping strategies ● Analysed GHO's risk with Chaos Labs Risk Dashboard

More specifically we used Github, Solidity, Hardhat, Ethers, TypeScript, JavaScript, Next.js, React, hardhat-deploy extension for hardhat

All repos https://github.com/ABertoG/aave-interface https://github.com/ABertoG/aave-v3-deploy https://github.com/ABertoG/aave-gho-core