Proposal Description
This ARC proposes enabling stkAAVE rewards for AMPL lenders on the Aave v2 market.
ARC Rationale
The AMPL pool generates a disproportionately large percentage of Aave protocol revenue. As of the 27th of November, AMPL generated $249,500 in daily revenue, 24.8% of total daily revenue for Aave v2, despite making up less than 0.1% of Aave v2 TVL. For comparison, the USDC market generated 328,000$ during that time, despite having a market that is over 300x larger. (Source: Token Terminal, note this does not include revenue from the Polygon and Avalanche markets).
While revenue generated by the Ampl market varies significantly as utilization rate changes, the November 27th numbers are not an anomaly, with AMPL bringing in roughly 13% of Aave protocol revenue over the last 30 days.
It seems reasonable to partition liquidity mining rewards based on the revenue brought in to the Aave protocol by each respective market. Because the AMPL market generates a disproportionately large amount of revenue, it is in the interest of the Aave protocol to increase AMPL market size, so that revenue may increase further. Enabling stkAAVE rewards for AMPL lenders would incentivize them to deposit more AMPL, growing this pool and revenue stream.
Discussion
I am interested to hear the community’s thoughts on this proposal.
I think that stkAAVE rewards are a great incentive for Ampl lenders, especially during scenarios when the lenders actually receive a lower APY than borrowers(typically when the rebase is 2% or greater).
The AMPL lending pool is the most cutting edge pool in crypto right now, and AAVE is in the driver’s seat. AAVE rewards can further promote the pool, and attract more users to the platform . It’s a win win for AMPL and AAVE.
I agree this proposal so much. AMPL is a specail stable coin,and will have a brand use cases. Not only reward the lending but also the borrowing,will be good to AMPL and also to AAVE, i really hope this proposal will come true!
It is very important, that stkAave distribution should be calculated from the profit that the asset brings, and not only from the amount of liquidity that is contributed by lenders. Maybe from 50% to 100% of all stkAave will be distributed depending of how much profit specific asset is generating profit for Aave protocol? What Aave fam think about this?
The Ampl Aave market is very unique in a sense that it doesn’t necessarily guarantee that a lender will outperform a borrower. stkAAVE rewards offer a great incentive for depositors to deposit Ampl and can level the playing fields a bit for the lenders during high rebase time.
I also think that since the Ampl market generates such a large amount of revenue for the Aave platform at a fraction of the liquidity, it benefits AAVE by including AMPL in the AAVE liquidity mining program.
I do agree with the proposal, and I think this an excellent way to incentivize the lender without trying to play with the interest curves since those are very hard to pinpoint and probably prone to errors as per this thread. I also think this is good for AMPL as people will hold it and lend it for longer.
