Should the staking model be upgraded to something like AAVE umbrella, improving the WELL governance token model? And, could it be paid for with recent liquidation revenue?
This is a good question. I’ve read the recent Umbrella proposal in Aave governance, and it is a good idea, to use collateral tokens instead of WELL to insure against bad debt. Aave will likely develop this new safety module over the next ~6 months or so.
It should be noted that this doesn’t really change the governance model of Aave, it simply means AAVE tokens can no longer be staked for rewards in the new Safety Module.
Aave does mention that in the future they might use Reserve Factor, which is the same thing Moonwell has, to help pay for staking incentives. I think this is a good idea as well, but it does increase regulatory risk to some extent. Currently, all the fees for borrowing and liquidations are captured as Reserves in each market through Reserve Factor.
Now that Moonwell contributors have largely finished significant product features, such as USDC Anywhere, Smart Wallet support, Morpho integration, and Optimism deployment, after some tech debt reduction and app performance improvements we are working on now, we’ll dig into improving the Moonwell Safety Module to support similar functionality.
Staking Moonwell collateral tokens (mTokens) makes a lot of sense, and redirecting some excess reserves to those backstopping each market also makes a lot of sense. Thanks for sharing this idea, it is an area of interest to me.
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Thanks for your insights and credit to 0xMims for the forward thinking reply in the Create Structure Demand post. 
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