Aave USAT gateway could block swaps to recover deposits

TokenLogic’s Oct. 15 governance proposal would create a permissioned GHO Stability Module, or GSM, on Avalanche. The module would let approved counterparties exchange waUSAT, a receipt token for USAT supplied to Aave V4, for GHO.

An approved counterparty would first deposit USAT into Aave V4’s Tokenization Spoke and receive waUSAT. It could then exchange the receipt tokens for GHO through the GSM. The module would hold the waUSAT while the USAT remained supplied to Aave.

A return swap would exchange GHO for waUSAT rather than directly provide USAT or dollars. The participant would then need to withdraw the underlying USAT from Aave and meet Anchorage Digital Bank’s separate requirements for redeeming USAT.

Approval would apply to the originator of every swap. Revoking approval could block further exchanges, including a transaction intended to recover assets deposited in an earlier swap. An approved originator could name another recipient or use a relayer to submit a signed transaction, but the originator would still need approval.

GHO received through the module would remain transferable. A participant whose access was revoked could transfer GHO, but could not exchange it for waUSAT through the module.

The initial whitelist would include a commercial counterparty and an Aave decentralized autonomous organization Safe controlled by the Aave Finance Committee. Both would use shared liquidity and the same pricing. The module would not track each participant’s principal separately or require a return swap to match an earlier deposit.

The proposal sets initial reserve funding at 65 million GHO, a remote GSM draw limit of 25 million GHO and a 20 million waUSAT exposure cap. It lists zero fees for both swap directions, while leaving the pricing strategy and related contract address undecided. Anchorage’s separate USAT redemption fee would be 10 basis points.

The module would have emergency controls. Freezing it would stop exchanges. Seizure would transfer assets held by the module to a designated treasury and prevent further exchanges. TokenLogic said agreements with counterparties would need to cover restrictions on reversing swaps.

The proposal’s bridge table lists 66 million GHO of outbound capacity as 110% of the initial 65 million GHO funding. However, 110% of 65 million GHO equals 71.5 million GHO. After funding, proposed ongoing capacity would be 5 million GHO in each direction, with a refill rate of 1,000 GHO per second.

As of Oct. 18, the proposal still called for a Snapshot vote followed by an implementation proposal if approved. Addresses for the Avalanche USAT contract, waUSAT, the reserve and the commercial counterparty were not provided. The pricing and fee strategy contracts, automatic freezer and oracle selections also remained unspecified.

Anchorage’s current contract table lists USAT on Ethereum and Celo, with no Avalanche entry. Its policies limit issuance and redemption to clients with an account relationship in good standing under a written agreement. Holding USAT alone does not establish that relationship. Redemption requests may be delayed, restricted or refused for legal, risk or operational reasons.

Anchorage processes USAT redemptions at $1 per token before fees, subject to its procedures. The bank’s fee schedule effective Oct. 9 lists a 10-basis-point redemption fee.