Lending Platform Aave Will Launch Liquidity Mining Program: Report

The lending platform Aave will launch a liquidity mining program on Monday which could set the platform closer to becoming the dominant DeFi lending protocol as we can see more in our latest cryptocurrency news.

Earlier today, the lending platform Aave announced that Improvement Proposal 16 reached quorum which means that starting on Monday, the liquidity providers and borrowers in Aave, DAI, USDT, ETH, WBTC pools will earn sTaave rewards in addition to their standard interest yields. According to the AIP 16 providers and borrowers in these pools, they will split 2200 sTAVVE tokens per day from the current 2.9 million AAve ecosystem reserve that is now worth nearly $1 billion.

AIP 16 officially passed the quorum https://t.co/Hux4Pm87Pl
Liquidity mining coming to @aaveaave on Monday 26th!!!
2200 stkAAVE/day redistributed for the vast majority on DAI/USDC/USDT.

— Emilio Frangella (@The3D_) April 23, 2021

In the proposal written by investor Parafi Capital Anjan Vinod, the goal of the program is to drive the lending and borrowing activity across markets as well as to increase the decentralization of the protocol’s governance by distributing the governance tokens for more users. The move is a novelty for Aave as the lending platform has been ranked among the largest Defi protocols despite not having a liquidity mining program like others among competitors. According to the respective apps, Compound is now on top of the lending protocol game with more than $15.4 billion in total value locked on the markets.

Aave now counts for $6.8 billion across their Ethereum, Polygon, Ethereum v2, and AMM LP tokens market. Aave’s co-founder Stani Kulehcov said that he expects the added incentives will bolster the protocol’s TVL significantly:

“The proposal allocates most of the rewards on stablecoins meaning that we will see substantial increase in TVL.”

With the governance protocol noting, the lack of liquidity mining program has put Aave at a competitive disadvantage in the past as for example, at the time of writing money market Compound offered a 3.31% yield on the USDC Stablecoin. A recent Tweet from Aave developer Emilio Frangella shows that the new program will bolster the yields and will offer them to borrowers that could outstrip the APR borrowers owe on the loans.

The lending platform Aave will open the doors for a new form of liquidity in a beta mode to further investigate how the inclusion of liquidity mining rewards will benefit the entire ecosystem. Kulechov noted:

“Aave community has for and against views on the topic previously, against mainly because Aave Protocol has been successful in organic growth. However, since now liquidity mining network effects are proven to work, it gives an opportunity to experiment it in Aave and that might been grounds for the swing.”