The Aave Treasury Management Vision

Managing the progression from using AAVE to aTokens for paying expenses shall require budgeting for future costs, forecasting future revenue and considering other potential use cases for aTokens. Ultimately, the vision is to have sufficient aToken inflows to accommodate all use cases. 

The long-term vision is  for all of Aave’s expenses to be funded in perpetuity from income. For now, most of the expenses are paid in AAVE (Staking Rewards, Liquidity minings, grants, etc.) and this is sustainable for a period of time. However, longer term using aTokens (stable coins) to pay expenses allows the community to retain exposure to ... See more

In traditional accounting, we measure the decision-usefulness of financial reporting in two ways: relevance and faithful representation. Relevance refers to whether the financial reports include line items that are material, comparable between periods, and verifiable. Faithful representation refers to the financial information being complete, free ... See more

Aave will continue to build a public Dune Dashboard 25 that tracks protocol revenue and expenses over time. This will provide the community a real-time view into financial performance and treasury spending. The community could also monitor the Aave treasury’s performance via token holdings and the correlations between what the treasury holds and ot... See more

Real Time Data MetricsPerformance AnalysisFinancial ReportingCash Flow StatementBalance SheetIncome StatementBudgeting / Forecasting Expenses

Live financial tracking accessible via Dune and/or other platforms will enable performance to be measured in real time. This will provide visibility into what is happening on-chain in an easy to interpret manner and hopefully encourage community members to engage in discussion across the community. Aave intends to provide the following financial in... See more

Aave DAO can utilize token swaps to form alliances with other DAOs. Alliances can help Aave with integrating relevant products, improving TVL, and increasing stablecoin deposits. Alliances are also very useful for DAOs to help each other in times of need, such as during smart contract exploits. 

We would recommend that illiquid investments be limited to a maximum of 50% of the treasury portfolio at any particular time, which is in line with the mean endowment allocation to illiquid alternatives. In practice, we would expect illiquidity to remain much lower than this maximum.

After ensuring operational needs are accounted for, illiquidity can be used to capture higher returns. Theoretically, and as part of the analysis when making an investment, illiquid assets (e.g. seed stage investments or strategic cross-DAO partnerships with defined lock-up terms) should capture a return premium relative to liquid assets. This is w... See more