DeFi project Aave unveils the token to rule its $400 million protocol
DeFi lending protocol Aave has released its plan, dubbed Aavenomics, for transitioning to decentralized, community-run control—with a new governance token to boot.
One of crypto’s oldest DeFiDeFi protocols is jumping on board the distributed governance bandwagon.
Crypto lending protocol Aave released today its proposal for upgrading to distributed governance. The “Aavenomics” proposal follows in the footsteps of other recent DeFi protocols moving to decentralizeddecentralized governance, starting with lending platform Compound and more recently synthetic asset exchange Synthetix. (Though, to be fair, Aave’s decentralized governance proposal has been in the works since January, according to founder and CEO Stani Kulechov.)
The latest move signals that decentralized governance (and its associated tokens) is more than just a fad, as an increasing number of protocols managing millions in user funds make the jump to community control.
Today Aave takes a leap towards decentralisation with our tokenomics upgrade: the Aavenomics Proposal.
Aave, formerly EthLend, launched in 2017 and raised nearly $18 million in an ICOICO later that year. In September 2018 EthLend became Aave, introducing a variety of new products including a custody service for institutional and private investors and an enhanced lending product.
Aave also received additional funding earlier in 2020, selling LEND tokens from the reserve to VC firm ParaFi worth $4.5 million, and a combined sale to firms Three Arrows Capital and Framework Ventures for $3 million.
At the moment, there is more than $400 million worth of EthereumEthereum locked up in Aave, according to metrics site DeFi Pulse.
The Aavenomics proposal begins with a 100:1 conversion of existing 1.3 billion LEND protocol tokens to 13 million AAVE governance tokens, with an additional 3 million tokens minted for an “Ecosystem Reserve” to be allocated as future incentive payments determined by the community. The conversion will be carried out via a vote using LEND tokens in a Genesis Governance Poll to deploy the smart contractssmart contracts required for distributed governance.
AAVE holders will be able to stake tokens in a novel “Safety Module” that acts as an insurance against shortfall events, like the one that impacted Maker as a result of the March crypto crash. AAVE stakers will receive a percentage of protocol fees as well as additional payments serving as “Safety Incentives.” A Balancer pool will also incentivize market liquidityliquidity, providing additional potential rewards in swap fees and BAL distributions for AAVE holders.
Aave has also ramped up business in flash loans, a micro-term financial tool that allows users to borrow millions of dollars of capital with no collateral as long as the loan can be paid back within the space of one EthereumEthereum block, lasting about 15 seconds.
DeFi isn’t just about yield farming, and another new financial tool has rapidly been on the rise.
More than $138 million worth of flash loans were issued via Aave on Monday, a new all-time high for the novel financial instrument. Flash loans allow users to take out sizable loans with no collateral, on the condition that on-chain activity with the funds are profitable and all activity can be completed in a single block.
It’s another way DeFi protocols are putting locked capital to use, developin...
Aave has now joined a growing list of DeFi protocols including Balancer, yEarn.finance, and more that are planning or have already released mechanisms for distributed governance. Putting power into the hands of users, rather than facilitators or middle men, has always been a lofty cryptocrypto promise.
But now, more and more DeFi protocols are putting their money where their mouths are, paving the way to make that dream a reality.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
Digital assets may be firmly in the mainstream, with institutional involvement and a crypto-friendly president in the White House.
But hackers and fraudsters are having a field day so far this year.
Crypto users have lost over $1.7 billion to these groups—already 14% more than 2024’s total losses of $1.49 billion, according to blockchain security firm Immunefi.
In the same period last year, losses totaled $420 million, the firm said.
The report comes amid ongoing concerns about the vulnerabil...
Libre, a regulated real-world asset platform, and the TON Foundation have launched a $500 million tokenized fund on The Open Network, aiming to bring Telegram’s $2.4 billion in corporate debt onto the blockchain for the first time.
Dubbed the Telegram Bond Fund, the product allows institutional and accredited investors to gain exposure to Telegram’s outstanding bonds directly through the TON blockchain, according to a statement shared with Decrypt.
The fund will also participate in future Telegr...
Solana decentralized exchange Raydium has deployed its native token launchpad, which is designed to rival the popular Pump.fun. This comes almost a month after Pump.fun deployed its own decentralized exchange, cutting ties with Raydium in the process.
LaunchLab by Raydium offers a more sophisticated token creation process, compared to Pump.fun’s simplistic approach. The new launchpad allows for deployers to toy with the token supply, how many tokens will be sold on the bonding curve, and how muc...