Aave v2 launches liquidity mining program targeting stablecoin borrowers

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

At the time of writing, customers who deposit stablecoins into the protocol can earn an addition yield of between 4.78% and 13.49% on prime 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.

However, the very best rewards seem like going to stablecoin borrowers, who’re at present receiving rewards of between 5.15% and 22.05%

The liquidity mining program was passed by means of a governance vote on April 24, 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 will probably be reviewed in July.

More 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 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 they needed to reward steady tokens extra to discourage dangerous borrowing and enhance stablecoin liquidity.

With roughly 40% of Aave’s TVL nonetheless locked in its model one iteration, the v2 rewards marketing campaign can 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 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 in accordance with a tweet on April 25.

According to DeFi Llama, Aave is at present the sixth-largest DeFi protocol with a TVL of roughly $7.5 billion.