The Aave ecosystem is coming to Ithil

Aave x Ithil

Great news, dear Wizard Enjoyers and Acolytes! Aave Grants DAO has approved our proposal to build an Aave integration on Ithil In this article, we’ll explore what that means.

1. What did Ithil propose?
2. How will the Strategy work?
3. How does this benefit the Aave ecosystem?
4. What is the timeline for deploying?

1) What did Ithil propose?

Our proposal to Aave’s governance community was threepronged:

• Build an Aave integration for Ithil that would allow the protocol to create Strategies for Aave’s ecosystem.
• Whitelist the $AAVE token, allowing it to be deposited into Ithil’s Vault and to be used as collateral for all of Ithil’s Strategies
• Create the first Aave ecosystem Strategy; supplying liquidity to Aave’s money markets.

2) How will the Strategy work?

The Strategy will work as follows:

• An Ithil User provides collateral in their token of choice to the Aave Strategy on Ithil.
• The User select one of the available tokens to deposit on Aave’s money markets, and chooses the desired boost level, guided by Ithil’s capital optimisation UI.
• The Strategy provides the liquidity to the chosen Aave pool and returns the aTokens to Ithil’s Vault.
• When the User decides to close the position, the aTokens are burned and the underlying notional + accrued earnings are sent back to the User.

If you would like to understand how Ithil’s Vault and Strategies interact to enable undercollateralised loans, please read here.

3) How does this benefit the Aave ecosystem?

A) Increase TVL: the strategy will encourage users to deploy liquidity on Aave, preferably boosting their deposit through our lending engine.

In fact, staking on Aave through Ithil and letting the smart contract optimise the capital allocation is always more efficient than directly depositing on the underlying protocol.

B) Expand the Aave Ecosystem: the AAVE token will be whitelisted on Ithil, and will create a dedicated strategy to encourage our users to lock their AAVE tokens.

C) Create internal growth/value: Ithil is a long term project with various partners already secured, and an eventual partnership with Aave can be beneficial for both sides.

D) Grow user base by enabling smaller players: Ithil can help small users deploy liquidity on Aave and make a profit by capital boosting, thus increasing the generated fees and the protocol usage.

4) What is the timeline for deploying?

We will start working on this project soon™.

The estimated delivery time is three months, which includes building the strategy, testing and performing the necessary security audits.

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