Launch Aero Fed on Base

DOLA Feds
1

Summary

This proposal aims to launch the Aero Fed, an AMM DOLA Fed that will be connected to the newly launched DOLA/USDC pool on Aerodrome, on the Base chain. This fed-deployed liquidity will be earning rewards in the AERO token.

Background

In October 2022, in proposal 68 the Inverse Finance DAO launched the Velo Fed on the Optimism chain. This went on to be a huge success for the DAO, with the Velo Fed driving deep liquidity on the Optimism chain, facilitating the TWG to build one of the largest veVELO positions that gives significant power to control future VELO emissions, and over $357k stablecoin revenue brought directly back Inverse Treasury.

Base is an L2 built on OP Stack in collaboration with Optimism by Coinbase. It is incubating inside of Coinbase, leveraging the last decade of experience building crypto products. It enables very low-cost transaction costs for users, similar to other L2 chains.

On 28th August 2023, the Velodrome team launched Aerodrome (a fork of Velodrome v2) on Base (a fork of Optimism). This launch has been hugely successful with $183m of TVL deposited as liquidity to the protocol so far. As one of the largest veVELO holders, the Inverse Finance TWG was granted one of the largest veAERO NFTs at launch (3.2m veAERO, worth ~$1.19m at August month end). This vote weight was used 100% on DOLA/USDC, with $4.5m depth already built up.

Objective

This proposal seeks to launch the Aero Fed on Base. In order to do this, a BaseNetworkFed contract on Ethereum will need to be given DOLA minting rights in order to supply it as liquidity in Aerodrome. The goal of this fed is to establish extremely deep DOLA liquidity on Base while also growing a sustainable veNFT position to incentivize liquidity in the future at a low cost to INV holders. This will lay the path for a potential deployment of FiRM on Base in the future. The code being used for BaseFed and AeroFarmer is very similar to what is currently in use for OptiFed and Velo Farmer.

Relevant Contracts:

  • BaseNetworkFed: Mainnet : 0x24a3c49e5cd8786498e9051f5be7d6e86b263c8b
  • AeroFedMessenger: Mainnet : 0xf090f285b6eaeb7e22487029b42a9ae59224056f
  • AeroFed: Base : 0x2457937668a345305FE08736F407Fba3F39cbF2f
  • Base Fed Chair: Base : 0x7FD13dD8d653F32Bd5E2B6bAbb4978507960A0dA

For Velo Fed comparison:

  • OptiFed: Mainnet : 0xfEd533e0Ec584D6FF40281a7850c4621D258b43d
  • Velo Farmer: Optimism : 0x8Bbd036d018657E454F679E7C4726F7a8ECE2773

On-Chain Actions

  • Set BaseNetworkFed as DOLA minter
  • Set AeroFed base address in BaseNetworkFed
3 Likes
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RWG assessment for the Aero Fed can be found here.

1 Like
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Thanks for the RWG assesment it is important and contains lot of information that are needed to apprehend this proposal.

The assessment mention the asset risk exposure to aero token, I would like to know more about this. Were the aero token that will incentivize this FED payed by the treasury or received ? How are they supposed to be managed ? Will we buy more ?

Also the assessment mention that native usdc is now live and that a V2 would be needed to for the new lp pair. What is the timeline for this lp migration ? Ideally if that is not too long I would rather only see the aero fed for the native usdc and skip this one.

4

The TWG received a large veAERO airdrop due to accumulating a large veVELO positon on optimism. This voting power, along with incentives, will be used to direct rewards to the DOLA/USDC pool on Aerodrome, where the Fed will farm more Aero tokens. The current plan is to use these Aero tokens to recycle round to more vote incentives, with excess being locked to increase the DAO’s voting power. For the first few months, this is the best strategy to grow a very large veAERO position will can be used in the future to significantly decrease the cost of DOLA liquidity, as has been demonstrated by the veVELO position for some time on Velodrome.

It takes time for a blockchain to transition from bridged to native USDC. We are waiting to hear more from the team at Aerodrome regarding the plan for this, but we know the process will be gradual whenever it starts. When the moment is right, we’ll launch an AeroFed v2 that is attached to a DOLA/USDC(native) pool. There isn’t much benefit in delaying the launch whilst waiting for this moment, as it could be many weeks out.

1 Like