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Aave v2 launches liquidity mining program targeting stablecoin borrowers

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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 extra yield of between 4.78% and 13.49% on high of their common features within the type of staked Aave (stkAAVE) tokens. Wrapped Bitcoin (wBTC) deposits are additionally paying an additional 4.59%, whereas Ether (ETH) deposits are garnering 2.11% in rewards.

Nonetheless, the best rewards look like going to stablecoin borrowers, who’re at the moment receiving rewards of between 5.15% and 22.05%

AIP-16 acquired overwhelming ‘yea’ votes from the neighborhood and has formally been executed. This proposal, created by @paraficapital, introduces liquidity mining incentives for Aave V2 ⛏️️https://t.co/ewa2Yvlc3w pic.twitter.com/s7xgz21eZ8

— Aave (@AaveAave) April 26, 2021

The liquidity mining program was handed via a governance vote on Saturday, with 2,200 staked Aave (stkAAVE) set to be distributed to lenders and borrowers till July 15, value roughly $880,000 at present costs. The program might be reviewed in July.

Greater than two-thirds of rewards have been designated to the USD Coin (USDC) and Tether (USDT) markets, with the remaining 32.5% being distributed amongst Aave’s Dai, ETH, wBTC and Gemini Greenback (GUSD) markets. Aave said:

“AIP 16 increases the liquidity in the Aave Ecosystem Reserve, which can be used to fund grants, devs, and builders through a community-led grants programme.”

Aave stated it 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 1 iteration, the v2 rewards marketing campaign can also be meant emigrate customers to its up to date protocol. “By introducing liquidity mining rewards only on Aave v2, liquidity providers and borrowers will naturally migrate toward the optimized version,” Aave stated.

The program follows the success of liquidity mining rewards incentivizing customers to discover Aave’s deployment on Layer-two scaling answer, Polygon (beforehand referred to as Matic). A tweet on Sunday famous that Aave’s Polygon deployment had surpassed $1 billion in TVL and seven,200 customers inside 10 days after its launch.

In keeping with DeFi Llama, Aave is at the moment the sixth-largest DeFi protocol with a TVL of roughly $7.5 billion.

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