Written by: Elaine, Dirk, Jereyme
Compiled by: Sissi
Translator’s Note:
This translation will introduce a proposal that has just been funded by Aave & GHO Ecosystem Advancement. The proposal aims to use the code-free, visual modeling and simulation tool HoloBit to build a high-fidelity GHO basic model for the top DeFi protocol Aave, allowing complex simulation technology to move from a few experts to the community and the public, so that more ordinary people can participate in construction and innovation.
The value of this proposal is to promote innovation in protocol design through rapid trial and error and efficient iteration, and to check economic security risk points in advance through OffChain simulation, improve design quality and reduce trial and error costs. In addition, as an interactive educational tool, this model aims to enhance users' understanding and trust in the GHO system and improve the community's ability to participate in governance and its response speed.
1. Proposal Details
1.1 Background Overview
As a key leader in the DeFi field, AAVE has always been at the forefront of the industry with its innovation and technological development. As Aave's native stablecoin, the launch of $GHO is a key strategy to promote the AAVE ecosystem to further complete mass adoption and even promote DeFi to cover the next billion users. However, as a relatively late stablecoin on the market, GHO still has huge room for growth, which will inevitably involve the rapid introduction, verification and deployment of a series of subsequent innovative solutions. How to quickly and comprehensively optimize the design and risk screening of various solutions while maximizing innovation, and transparently and efficiently collaborate with the community to make scientific decisions, is crucial for the current AAVE&GHO.
1.2 Project Introduction
This proposal aims to use HoloBit, an advanced code-free, visual modeling and simulation tool, to build a high-fidelity GHO OffChain basic model that can be read, used and verified by the public, so that simulation can move from a few people to the community and the public. ("OffChain simulation" uses machine learning and statistical models to analyze off-chain data, and by running a large number of Monte Carlo simulation scenarios, it can efficiently evaluate economic mechanisms and potential risks without directly interacting with the blockchain; "OnChain simulation" is to fork the blockchain at a specified block height, create a test environment similar to the main network, and simulate the protocol with high precision).
We will build key "building blocks" such as Users, Facilitators (AAVE Pool, FlashMinter, GSM), GHO, Market, Goverance, etc., and complete the Lego-style GHO model construction through minimalist operations such as dragging and connecting. At the same time, we will conduct strict validity tests on the model to ensure that it can restore the GHO protocol ecosystem with high fidelity.
The future role of this model includes but is not limited to the following aspects:
Providing insights: By capturing and analyzing the key mechanisms and parameters in the GHO ecosystem, the model can reveal the main factors that affect the system behavior and help users understand the operating principles of complex systems.
Optimize design: The model provides an experimental platform where users can use simulation results to continuously adjust and optimize protocol mechanisms and parameters, fully verify various design solutions, and improve the efficiency of innovation iteration.
Anticipate risks: By testing different scenarios and assumptions in the model, potential system vulnerabilities and risk points can be discovered in advance, so that corresponding response strategies can be formulated to reduce uncertainties in actual operations.
Support decision-making: The data and analysis results provided by the model can provide valuable reference for decision makers, helping them make more informed decisions in complex environments.
Importantly, the simulation model is highly transparent and supports sharing. Its flexible and friendly "Lego-style" construction and expansion methods allow non-technical users to easily access and innovate, and is expected to become a powerful education, governance and promotion tool for the GHO protocol. At the same time, the model can also complement and enhance the existing protocol design and risk management framework, providing a new implementation idea for the next generation of "community-based innovation and security solutions."
1.3 Project Value
Specifically, this new solution will bring at least the following value:
Rapid trial and error, bold innovation, and efficient iterative protocol design
The GHO base model is a powerful tool for innovation verification and design optimization. It provides a unique experimental space where users can brainstorm freely and boldly. Whether you are exploring better parameter combinations or experimenting with new mechanisms, you can do it based on this highly user-friendly and flexible basic model. Each new idea can be quickly prototyped and iteratively optimized. For example, you can efficiently experiment with various GHO integration solutions, such as different "soft liquidation" mechanisms, emergency redemption mechanisms, etc., and through the simulation results of the OffChain model, effectively identify innovative combinations that are relatively feasible and have potential. This not only greatly shortens the time from concept to implementation, but also significantly reduces the cost of trial and error. In this way, the GHO basic model will greatly improve the speed and quality of design iterations, and will also help AAVE and GHO innovate in protocol functions, expand in new chains and use cases, and stay ahead with more obvious advantages. The level of technological and service innovation.
Comprehensively screen economic security risk points and efficiently reduce the experimental space for simulation
Compared with the conventional protocol development process, we propose to add an OffChain simulation link before the development of smart contracts. The advantage of this is that security can be built in at the design stage. Through the OffChain model that has been verified for effectiveness, the "behavior space" of the protocol system under the new design scheme can be previewed in advance, and potential risk points can be quickly and comprehensively scanned. Combined with the feedback of the OffChain model, the design is continuously optimized iteratively, and the "problem domain" of economic security is efficiently reduced, saving a lot of time and resources for subsequent OnChain simulations. It is a relatively cost-effective way to troubleshoot and optimize design defects in the early stages of the design. For the AAVE and GHO ecosystems, the coordination of OffChain simulation and OnChain simulation may be a more economical security solution.
Interactive dynamic education and promotion tools
The initial prototype of GHO is user-friendly enough that even non-technical users can easily understand the mechanism of the model and perform innovative operations such as verification, experimentation, customization and extension.
This model can be used as an interactive and dynamic educational tool for GHO. If it can be embedded in the Concept introduction page of GHO, users' understanding of GHO will not be limited to reading documents. They can also directly see the design, interaction and simulation results of the mechanism through an intuitive and dynamically running visual model, which realizes the "double transparency" of the protocol mechanism and risks. Users can also interact with the model freely, debug parameters and even increase or decrease mechanisms, and more intuitively understand the system impact of different decisions. At the same time, the rapid iteration and update of the Offchain model also makes the educational content highly timely, keeping relative synchronization with the protocol smart contract code, and realizing the "real-time transparency" of the protocol mechanism and risks.
At the same time, the model can also be shared with one click. This means that if the initial prototype of GHO can be popularized in the community, it will promote more extensive user education and in-depth participation, and enhance the public's awareness, trust and acceptance of the AAVE and GHO systems. This is also a key step for AAVE & GHO to expand the market and gain mass adoption.
Improve the degree of decentralization and response speed of governance, and enhance community innovation
The GHO initial prototype is highly usable and scalable, allowing users of all backgrounds to participate in the governance of the AAVE and GHO ecosystem. When the public's awareness of the mechanisms and risks of GHO is high enough, everyone can experiment based on the GHO initial prototype, not only to deduce the potential consequences and risks under various extreme scenarios or assumptions, but also to innovatively optimize iterative mechanisms and parameters. At the same time, everyone can share their findings in the community and submit proposals for protocol improvements.
The initial prototype of GHO gives the public the ability to deeply participate in protocol governance, which can not only significantly improve the response speed of governance, but also help maintain a high level of participation and decision-making quality in the growing community, and even stimulate exciting community activities. creativity. Taking Facilitator as an example, each user can show the community the running results, risks and potential impact of a new Facilitator model on the system to help the proposal gain more community recognition and support. As a result, everyone has the ability to participate in shaping the future, which will greatly stimulate the enthusiasm of community members to participate in governance and inject more possibilities for the future development of the protocol.
1.4 Project Innovation
Not only can it reduce risks, but it can also stimulate more innovation
Real-time and transparent display of mechanisms and risks
Designed for the community, easy for everyone to use
Unprecedented governance, education and outreach tools
1.5 Project Objectives
Short-term goals
Efficiently complete the construction of the GHO basic model to ensure that it can restore the protocol ecosystem with high fidelity, laying a solid foundation for the community to conduct subsequent advanced work such as design optimization and risk screening based on this model.
Based on the successful experience of AAVE, we try to provide a possible new idea for education, governance and promotion. With the GHO OffChain model as the core, we formulate a clear education plan to ensure that the public can understand, use, verify, customize and expand this model, and further consolidate the foundation for the implementation of community-based governance and promotion methods.
Long-term goals
Help build a more robust GHO ecosystem. By providing the OffChain model, we can assist the community in exploring possible optimization directions and work with other service providers to gradually improve the system's stability and ability to cope with market fluctuations.
Explore the application of the OffChain model in the AAVE ecosystem. If this method can be successfully piloted in the GHO ecosystem, we hope to reuse it in the AAVE ecosystem and contribute to the next mass adoption process of AAVE.
2. Study feasibility
2.1 Feasibility of protocol simulation
The famous statistician George Box once said, "All models are wrong, but some are useful." Models are essentially a simplification and abstraction of the real world, so both the OffChain model and the OnChain model are inevitably based on a series of assumptions. However, these assumptions do not affect the effectiveness of the model, but help us better understand and analyze complex systems through simplification and focus.
Risk management teams such as ChaosLabs, Llamarisk, and Gauntlet, which have made outstanding contributions to the ecosystem, have also made a lot of assumptions in the process of protocol simulation, such as Only DEX Liquidity, Price correlations, At most one liquidation per account per block, etc. These assumptions help them quickly focus on core issues. Although they simplify the real conditions, they do not affect the practicality and utility of the model in solving specific problems.
Judging from the results, these advanced teams continue to provide mature parameter optimization, mechanism iteration and other economic security management suggestions for the sustainable development of the AAVE protocol ecosystem, which to a certain extent also confirms the feasibility of protocol simulation. These successful cases show that both the OffChain and OnChain models, although based on assumptions, can be flexibly adjusted according to the simulation goals to ensure the effectiveness of the model, which provides valuable experience reference for the model construction work of this proposal.
2.2 The feasibility of the team using HoloBit to complete protocol simulation
About the Team
The team members have interdisciplinary expertise, including computer science, economics, systems engineering, blockchain, etc. They have a deep academic theoretical foundation and rich project experience in related fields such as complex system modeling and protocol simulation. Their past projects have been recognized by the TokenEngineering Commons grant program and they have the ability to complete this proposal. The team members are as follows:
Elaine: Researcher. With high ABM modeling capabilities and rich experience in financial quantitative analysis, she has successfully reproduced the financial physics laws in high-frequency trading order books through models. With rich experience in modeling and protocol simulation practice, she is currently focusing on the research of token engineering and protocol modeling and simulation.
Dirk: A token engineer with five TEA NFTs, he focuses on designing and optimizing cryptographic protocols. He has in-depth research on token economics and token engineering, and is good at customizing and optimizing token economic models for various projects to improve their stability and performance.
Jeremy: A Token Engineer with five TEA NFTs, focusing on designing and optimizing crypto protocols. Since 2022, she has been working on token engineering, promoting education and collaboration in the field.
About HoloBit
HoloBit is user-friendly, transparent, and shareable enough to make the GHO initial prototype a community education, governance, and promotion tool.
It has a Turing-complete Agent-Based modeling and simulation engine, which is an important foundation for completing the high-fidelity OffChain GHO model.
Existing research results
This research team has used HoloBit to quickly build an OffChain model of the Terra/Luna protocol, and successfully reproduced the internal mechanism of the Terra/Luna collapse through simulation experiments, demonstrating the research and modeling capabilities of this team and the ability of the HoloBit tool to restore and build real-world protocols.
The Terra/Luna model link is as follows (need to be opened on the computer):
Scenario 1, Bull market:
https://app.holobit.world/embed/9ec46684798598c1c92b13a94231f9d429c0c4c8d9f2579069fb78b41e86c37b
Scenario 2, Bearmarket:
https://app.holobit.world/embed/9e9dbc531214e37ba84e254470326ff3b50314a91bd0cea6e50957924be628c7
Scenario 3, Bull market & Attack:
https://app.holobit.world/embed/7b9020e2fd1da643a2d4f424d8c72f579da30975e62430810e8261f5d1f90aa0
HoloBit has launched a series of research group support programs for protocol ecosystem optimization. We are fortunate to have applied for sponsorship of its premium account, and will use this advanced modeling and simulation platform to fully transparently build the details of our GHO initial prototype and the entire effectiveness verification process.
3. Research route
3.1 Technical route and deliverables
Overview of the technical route of this study: see original text
3.2 Current progress
In view of the important role of AAVE in the Defi ecosystem and the strategic significance of the launch of $GHO, we have pre-started part of the work on the first part of the technical route, "GHO mechanism research".
Based on the current preliminary research, our model will at least cover the following key areas:
See original article for details
Based on the current preliminary research, our model interaction process (draft) is as follows:
It is important to emphasize again that the above key blocks and process interaction diagrams are only the simple output of a quick preliminary investigation. They do not represent the final model prototype and may even contain some errors. As the investigation deepens, we will provide more comprehensive and accurate block descriptions and process interaction diagrams.
4. Conclusion
We hope that by introducing the OffChain GHO initial prototype into the AAVE ecosystem, we can not only cooperate with the existing risk management framework to protect the economic security of the AAVE and GHO ecosystems, but more importantly, we hope that this model will serve as a transparent and flexible experimental platform to encourage wider community participation and innovation. In addition to ensuring high-fidelity model development and optimization, the research funds applied for in this proposal will also be invested in community education and promotion activities to maximize the impact of this project in the Aave ecosystem.
We believe that the implementation of this project will effectively enhance the public's awareness, trust and acceptance of the AAVE and GHO systems, while greatly enhancing the community's governance and innovation capabilities. We look forward to working with Aave to jointly open a new chapter for Defi to cover the next billion users, allowing everyone to participate in this exciting new era safely, transparently and efficiently.
Thank you for considering this proposal and thank you HoloBit for your support. We look forward to contributing value to AAVE and the community at large and advancing this journey of innovation and change together.
