Aave Launches Genesis Governance with AIP1 Token Migration

https://defirate.com/aave-aip1/

Aave – the sector leading lending protocol – has launched its first Aave Improvement Proposal to ratify the migration from LEND to AAVE.

This milestone comes as a huge next step for the project, with tokenholders voting to ratify a token migration that implements the Aavenomics changes including staking incentives, yield farming, and a backstop module on top of decentralized governance.

Detailed in the AIP is the implementation of new Safety Incentives, or rewards to be earned from staking AAVE via a Safety Module as a reserve in the event of shortfalls. The proposal suggests 400 AAVE in rewards per day, good for roughly $20k in rewards each day when taking the 100 LEND > 1 AAVE swap into account.

Outside of the 100:1 tokenswap, AIP1 adds a 3M token Aave Reserve to a community governed treasury, good for Safety and Ecosystem Incentives in tandem with a fortitude of other rewards programs to come.

In the event the proposal passes, the Safety Module will be introduced using a bootstrap period with no slashing, making staking completely risk free to early adopters. There is currently no deadline on when LEND would have to migrate, however, those who are the first to stake to the Safety Module stand to earn the largest portion of the first day’s 400 AAVE rewards.

100 unique participants have voted on the proposal in the first 48 hours of launch, with early support signaling the proposal will pass in spades.

What’s unique about Aave governance is that voting is built directly into the application, utilizing a custom dashboard and governance module built directly by the Aave core team.

Lending Governance Thrives

When it comes to DeFi governance, we’re seeing an ongoing trend of token distribution proposals have the highest engagement to date.

With Aave, governance marks the start of new trends like adding new assets, adjusting interest rate models, and adding new money markets in line with core protocol upgrades like the token migration.

If one thing is for sure, Aave has solidified as a crucial foundation of the DeFi ecosystem. The migration to AAVE is set to kick off Aave V2, adding in a suite of gas optimizations that are sure to take the sector-leading protocols to new highs in the coming months.

To stay up with Aave, follow them on Twitter!

 

The post Aave Launches Genesis Governance with AIP1 Token Migration appeared first on DeFi Rate.

Aave Announces Aavenomics Token and Governance Upgrade

https://defirate.com/aavenomics-upgrade/

Aave, the rising money markets protocol, announced its token and governance upgrade Aavenomics: a formalized path to the decentralization and self-sustainability of the network.

For those looking for a quick TLDR, check out the post’s sleek Flashpaper. For those looking to do a deep dive, the full interworking cans be found here.

Token Economics

The upgrade features a handful of key additions and changes to the growing lending protocol. First and foremost, Aave’s native token LEND will migrate to a new token AAVE at a rate of 100: 1 following approval from LEND holders via the Genesis Governance Poll. In turn, the total supply will shift down from 1.3B LEND down to 16M AAVE.

While 13 million AAVE will be claimable by LEND holders at the aforementioned rate, the remaining 3M AAVE will be allocated to the Aave Ecosystem Reserve – a bootstrapping fund for protocol incentives governed by AAVE tokenholders.  The protocol’s ecosystem reserve will be allocated between a handful of different incentives, including both the “Safety” and “Ecosystem” incentives. With that, the reserve’s Safety incentive allocation will be distributed to holders who deposit AAVE into the Safety Module (SM). The Safety Module acts as an insurance reserve for Aave users in the instance of a shortfall event and in return, will receive rewards along with a percentage of the protocol fees. With that, it’s important to note that Aave will be transitioning away from the current burn model in favor of this dividend-like token model.

What’s interesting about the Safety Module is that it not only features vanilla AAVE in the module but it also leverages a Balancer pool to incentivize market liquidity. Naturally, the Balancer pool will also accrue BAL rewards and trading fees for Safety Module Stakers on top of the protocol’s native incentives – showcasing DeFi’s composability at its finest.

The other piece to the incentive puzzle is the introduction of Ecosystem Incentives. In line with the current trends in DeFi, Aave will be implementing a liquidity mining mechanism into the protocol. Therefore, users who supply or borrow assets from Aave will earn rewards.

Lastly, Aave governance may also elect to allocate a portion of the Ecosystem Incentives to fund or bootstrap applications building on the Aave ecosystem.

Governance

With the introduction of the Aave Ecosystem Reserve along with the team’s dedication towards decentralization and self-sustainability, Aave Governance is a critical piece to the Aavenomics upgrade.

The driving force behind Aave Governance is the introduction of Aave Improvement Proposals (AIPs) which represent modifications to the protocol that are ratified on-chain by AAVE tokenholders. An interesting design piece to this is that users who holder AAVE in cold storage or even staked via the Safety Module can use their token weight to vote on AIPs. Passive tokenholders also have the option to delegate their voting power to Aave Protocol Politicians.

Aave tokenholders will also play a role in adjusting Aave Policies, a set of governance defined rules that control the parameters behind the protocol, and individual money markets. As such, there are two main types of policies available for governance changes.

The first is Protocol Policies which dictate the overarching behavior of the Aave Protocol including risks, improvements, and incentives. The second is Market Policies which define the context and parameters behind each market within the protocol, like the Uniswap Money Market or the TokenSet Money Market. Changes to Market Policies may include adding or removing supported assets, adjusting loan-to-value ratios, or modifying interest rate models.

Closing Thoughts

With Aave’s explosion into the DeFi ecosystem this year along with their ability to consistently innovate with new products, like credit delegation, the Aavenomics announcement is right on brand with what the team has built to date.

The protocol is not only introducing emerging trends prevalent in DeFi like yield farming but also leveraging the blooming composability available within Ethereum’s DeFi ecosystem. The introduction of the Aave Safety Module provides AAVE tokens with a claim on the protocol’s cash flows while also featuring a Balancer pool to maximize rewards.

While the exact timeline on the Aavenomics mainnet launch has been kept high-level, we can expect that this upgrade will serve as a driving catalyst for Aave’s next leg in growth similar to Kyber’s recent upgrade in early July or the announcement of Bancor V2.

At the time of the announcement, value locked in the Aave protocol is up 13.2% to $424M in total assets while LEND surges 16% to $0.31 valuing the protocol at $395M.

If you’re interested in staying up to date, make sure to follow Aave on Twitter. For those looking to get involved in the discussions surrounding Aavenomics, make sure to join the official Discord!

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Aave Raises $3M for Aavenomics Governance Migration

https://defirate.com/aave-governance-raise/

Aave – a sector-leading lending protocol – has closed a $3M round on the back of LEND tokens in lieu of their upcoming Aavenomics upgrade.

Positioning themselves as a protocol for money market creation, Aave’s latest round saw $3M worth of contributions from Three Arrows Capital and Framework Ventures when LEND was $0.10 per token. Since then, LEND has soared to over $0.25 per token ahead of an Aavenomics governance upgrade in which LEND will migrate to AAVE with a suite of new protocol incentives.

This comes in tandem with other reputable funds like ParaFi and Spencer Noon’s DTC Capital, both of which have made it public that they also hold significant positions in LEND. DeFi Rate has also received intel that many other prominent DeFi funds have been accumulating positions in LEND, giving good credence to the DeFi token‘s parabolic growth in recent weeks.

Aavenomics Teaser

The raise foreshadows the launch of Aavenomics – a governance upgrade in which the migration to AAVE will introduce new protocol incentives through staking and yield farming. In short, users will stake AAVE as insurance against protocol deficits in return for both AAVE rewards and the vast majority of protocol fees. The staking module is expected to offer both vanilla AAVE staking in tandem with an 80/20 AAVE/WETH Balancer pool. This gives flexibility for those looking to stake with just AAVE while incentivizing those to provide market liquidity to Balancer in exchange for BAL rewards and swap fees.

AAVE staking comes in tandem with yield farming rewarding from protocol usage, similar to COMP and BAL liquidity mining schemas which have driven exponential growth in recent weeks. While the details have yet to be released, we expect users to earn AAVE rewards from lending and borrowing any of Aave’s 20+ supported assets along with special liquidity incentives similar to Synthetix‘s LP rewards.

Distributed Governance

Outside of vast protocol incentives, AAVE governance will distribute key decision making to tokenholders though onchain voting. Using Aave Improvement Proposals (AIPs), AAVE holders will dictate key protocol, market and risk policies for both Aave and different money markets like the Uniswap Money Market. Aave has vocalized that its governance process is meant to stimulate large amounts of discussion before going to an onchain vote, contrary to what we’ve seen so far with Compound and it’s 48-hour window voting periods.

These upgrades will be publicized in a formal Aavenomics governance paper in the next two weeks, kicking off a countdown to Genesis Governance in which LEND tokenholders will be able to vote on the start of AAVE migration in tandem with the proposed incentive allocations mentioned above.

Credit Delegation

Last week, we covered Aave’s proposal for Credit Delegation, essentially letting any two parties enter into undercollateralized lending agreements to use a counterparties capital as collateral to draw a line of credit with aTokens. While the program is set to be largely limited to OTC trading desks and exchanges to start, Credit Delegation is another example of Aave’s continuous innovation in the vibrant DeFi sector.

Aave Continues to Shine

As if it wasn’t clear enough, Aave has solidified itself as a force to be reckoned with in the great crypto landscape. With top firms publicizing their token holdings in tandem with the upcoming Aavenomics, it’s clear that the protocol for money market creation has a very bright future lined up for the coming months.

It’ll be interesting to see how the lending wars pan out, with protocols like Aave, Compound and bZx fighting for TVL in a rapidly growing sector full of strong incentives.

If one thing is for sure, DeFi Rate plans to play a big role in Aave governance and will be introducing a formal protocol bid upon the launch of Genesis Governance in a few week’s time.

To stay up with Aave, be sure to follow them on Twitter or join the conversation on Discord.

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