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!

<span data-sheets-userformat='{"2":513,"3":{"1":0},"12":0}' data-sheets-value="{"1":2,"2":"<script>(function() {
window.mc4wp = window.mc4wp || {
listeners: [],
forms: {
on: function(evt, cb) {
window.mc4wp.listeners.push(
{
event : evt,
callback: cb
}
);
}
}
}
})();
</script><form id="mc4wp-form-2" class="mc4wp-form mc4wp-form-151" method="post" data-id="151" data-name="Email List Signup" ><div class="mc4wp-form-fields"><p>
<bold> Sign up for This Week in DeFi</bold>
</p>

<input type="email" name="EMAIL" required="" placeholder="Email Address"><input type="submit" value="Subscribe"></div><label style="display: none !important;">Leave this field empty if you’re human: <input type="text" name="_mc4wp_honeypot" value="" tabindex="-1" autocomplete="off" /></label><input type="hidden" name="_mc4wp_timestamp" value="1596053412" /><input type="hidden" name="_mc4wp_form_id" value="151" /><input type="hidden" name="_mc4wp_form_element_id" value="mc4wp-form-2" /><div class="mc4wp-response"></div></form>"}”>

The post Aave Announces Aavenomics Token and Governance Upgrade appeared first on DeFi Rate.

iEarn Releases YFI Governance Token with Liquidity Mining

https://defirate.com/yfi-governance-token/

iEarn – a fan-favorite liquidity aggregator – has shared the blueprints for a YFI governance token in tandem with a suite of new liquidity pools.

Best popularized for the Y Curvepool, iEarn offers a number of avenues for users to earn passive interest for supplying capital to any number of the protocols supported pools. Historically, iEarn pools have earned some of the best lending rates in all of DeFi, with the yearn.finance pool aggregating $8M in AUM in tandem with a historical return of just over 10% APY since launch.

Today, iEarn introduced a suite of new, existing, and discontinued products including:

  • yTrade – Trade top stablecoins DAI, USDC, USDT, TUSD and sUSD with up to 1000x leverage using an initiation fee or 250x without an initiation fee.
  • iLiquidiate – An automated liquidation engine for Aave defaults.
  • iLeverage – Open a 5x leveraged Dai Vault using USDC as collateral.
  • iPool – A y.curve.fi <> sUSD curve.fi meta pool offering the best rates between Curve’s two most popular pools. (Discontinued)
  • ySwap – A stable AMM allowing for single-sided liquidity provision while collecting interest and rewards.
  • *.finance – TBA credit delegation platform using Aave undercollateralized loans.

What emerges is a sophisticated lending and arbitrage protocol that routes liquidity across different corners of DeFi to earn the best returns. Using lending protocols like Curve, dYdX, Compound, and Aave along with AMMs like Uniswap and Balancer opens the door for cross-protocol returns extremely difficult to mimic as an average user.

As if that wasn’t enough, the incentive to use iEarn just got a little sweeter.

YFI Governance Token

Following in line with the wider trend of liquidity mining, YFI can ONLY be earned through usage of any of the aforementioned pools. This is in stark contrast to something like COMP and BAL in which a portion was held by the time and another portion was offered in an Initial DEX Offering. Instead, the only way to earn tokens is through usage, and iEarn was very blatant about stating the token has 0 value outside of governance.

It’s likely that the most popular way to earn will be through the yCurve stablecoin pool, and Curve graciously put together a guide on this works here.

YFI Rewards Pool

Outside of openly memeing that YFI has 0 financial value, the project has created a pretty strong token model under the hood. Off the bat, iEarn pools aggregate a suite of rewards and fees including (but not limited to in the future):

  • yearn.finance interest
  • COMP
  • CRV
  • curve.fi/y trading fees
  • ytrade.finance leverage fees and liquidation bonuses
  • yswap.exchange system fees
  • iliquidate.finance liquidation bonuses
  • system dust (unassigned interest or fees)

All of these fees are collected on a regular basis and routed to a Vault which normalizes all the above-mentioned income to aDAI. Once in aDAI, YFI holders can claim a pro-rata share of that reward pool directly from the contract address by burning YFI tokens.

iEarn has stated that they will be releasing an interface for the burning and redemption of these fees in the coming weeks. Last but not least, iEarn has also shipped a staking dashboard to make it easy for users to stake and unstake their position across any of iEarn’s various liquidity pools.

Closing Thoughts

Underpinning this whole ecosystem is an incredibly meta ecosystem at play. While you need 1000 IQ DeFi knowledge to get involved, those who are savvy enough are sure to reap the rewards of the most organic, strongly-designed DeFi token to date.

As aggregate liquidity continues to heat up, we’ll keep reminding users that it’s a good time to be a yield farmer – so long as you keep in mind that there’s a lot of inherent risks that come with it.

Until then, be sure to keep up with iEarn on Twitter.

<span data-sheets-value="{"1":2,"2":"<script>(function() {
window.mc4wp = window.mc4wp || {
listeners: [],
forms: {
on: function(evt, cb) {
window.mc4wp.listeners.push(
{
event : evt,
callback: cb
}
);
}
}
}
})();
</script><form id="mc4wp-form-2" class="mc4wp-form mc4wp-form-151" method="post" data-id="151" data-name="Email List Signup" ><div class="mc4wp-form-fields"><p>
<bold> Sign up for This Week in DeFi</bold>
</p>

<input type="email" name="EMAIL" required="" placeholder="Email Address"><input type="submit" value="Subscribe"></div><label style="display: none !important;">Leave this field empty if you’re human: <input type="text" name="_mc4wp_honeypot" value="" tabindex="-1" autocomplete="off" /></label><input type="hidden" name="_mc4wp_timestamp" value="1595019506" /><input type="hidden" name="_mc4wp_form_id" value="151" /><input type="hidden" name="_mc4wp_form_element_id" value="mc4wp-form-2" /><div class="mc4wp-response"></div></form>"}” data-sheets-userformat='{“2″:513,”3”:{“1″:0},”12”:0}’>

Sign up for This Week in DeFi

The post iEarn Releases YFI Governance Token with Liquidity Mining appeared first on DeFi Rate.