Aave v2 launches liquidity mining program concentrating on stablecoin debtors

Aave has launched liquidity mining incentives for its v2 protocol, paying out governance token rewards exceeding 20% to customers who borrow stablecoins. 

On the time of writing, customers who deposit stablecoins into the protocol can earn an addition yield of between 4.78% and 13.49% on high of their common positive aspects within the type of staked AAVE (stkAAVE) tokens. Wrapped Bitcoin deposits are additionally paying an additional 4.59%, whereas Ether deposits are garnering 2.11% in rewards.

Nevertheless, the very best rewards seem like going to stablecoin debtors, who’re presently receiving rewards of between 5.15% and 22.05%

The liquidity mining program was handed by means of a governance vote on April 24, with 2,200 staked AAVE (stkAAVE) set to be distributed to lenders and debtors till July 15, price roughly $880,000 at present costs. This system can be reviewed in July.

Greater than two-thirds of rewards have been designated to the USDC and USDT markets, with the remaining 32.5% being distributed amongst Aave’s DAI, ETH, wBTC, and GUSD markets. Aave said:

“AIP 16 will increase the liquidity within the Aave Ecosystem Reserve, which can be utilized to fund grants, devs, and builders by means of a community-led grants programme.”

Aave stated they needed to reward steady tokens extra to discourage dangerous borrowing and increase stablecoin liquidity.

With roughly 40% of Aave’s TVL nonetheless locked in its model one iteration, the v2 rewards marketing campaign can also be supposed emigrate customers to its up to date protocol. “By introducing liquidity mining rewards solely on Aave v2, liquidity suppliers and debtors will naturally migrate towards the optimized model,” Aave stated.

This system follows the success of liquidity mining rewards incentivizing customers to discover Aave’s deployment on Layer-two scaling resolution, Polygon (beforehand referred to as Matic). An April 25 tweet famous that Aave’s Polygon deployment had surpassed $1 billion in TVL and seven,200 customers inside ten days after its launch based on a tweet on April 25.

In response to DeFi Llama, Aave is presently the sixth-largest DeFi protocol with a TVL of roughly $7.5 billion.