Decentralized lending platform Aave has historically operated without liquidity mining incentives. However, a governance proposal passed on April 23rd signals a major shift in strategy.
Proposal Overview (AIP-16)
Authored by Anjan Vinod from Parafi Capital (an Aave investor), AIP-16 aims to:
- Stimulate cross-market borrowing/lending activity
- Distribute governance tokens more broadly to decentralize protocol governance
- Enhance Aave’s competitiveness against rivals like Compound
The proposal received 739,414 votes—surpassing quorum requirements—and will take effect immediately.
Liquidity Mining Details
- Supported Pools: USDC, DAI, USDT, GUSD, ETH, WBTC
- Daily Distribution: 2,200 stkAAVE (~$1M USD value) from Aave’s 2.9M AAVE ecosystem reserve ($10B total)
- Initial Phase: Runs until July 15, 2021 (subject to community vote for extension/adjustment)
💡 Key Note: Rewards are distributed as stkAAVE, requiring a 10-day cooldown period after activation before conversion to AAVE. Unclaimed tokens after 12 days reset the cooldown.
Why Launch Liquidity Mining Now?
Competitive Landscape
| Platform | TVL | Stablecoin APY (USDC) |
|---|---|---|
| Compound | $15.4B | 5.51% (3.31% + 2% COMP) |
| Aave | $6.8B | 5.51% (interest only) |
Aave’s founder, Stani Kulechov, notes:
"With added mining rewards, Aave’s effective APY will surpass competitors. The proposal strategically focuses rewards on stablecoin pools to drive TVL growth."
Community Sentiment Shift
- Initial support: 60%
- Final vote: 739,414 to 1,884 in favor
Kulechov attributes this to: - Proven success of liquidity mining across DeFi
- Aave’s strong organic growth without incentives demonstrating readiness for experimentation
FAQs
Q: How do I claim stkAAVE rewards?
A: Rewards auto-accrue but require manual activation of the 10-day cooldown before conversion to AAVE.
Q: Will this affect Aave’s tokenomics?
A: Yes—the program draws from existing reserves, increasing circulating supply but also broadening governance participation.
Q: Why prioritize stablecoin pools?
A: Stablecoins dominate lending demand. Higher APYs attract capital while minimizing volatility risks for users.
Q: What’s next after July 15?
A: The community will vote to continue, modify, or sunset the program based on TVL and usage metrics.
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