Hello,
Thanks Matthew for this ARC.
Liquidity mining acted as a very powerful bootstrapper for the distribution of governance power to the users of Aave and the growth of the protocol.
That being said, it can also be seen as a very costly subsidy program for both protocol and treasury growth.
During the “peak” of DeFi, around 3.5$ worth of StkAAVE were distributed for each 1$ of treasury funds collected.
With the current market condition, if the program was restarted now, it’s likely that a double figure of $ worth of StkAAVE would be needed to collect a dollar of treasury.
We also didn’t witness a large drop in TVL metrics when the program stopped, a couple of weeks ago.
Another point is that the future of Aave is the V3 and not the V2, a subsidy program for a soon to be obsolete version of the protocol doesn’t seem very fit.
Lastly, the Ecosystem Reserve is not infinite, and AAVE is a fixed supply asset, slowing down the depletion of the ER by pausing the LM program might keep more bullets in the magazine when it’ll be more efficient to fire them.
I’m personally in favor of keeping the statute quo for now, while waiting for the V3 upgrade proposal of the Aave L1 market and a rework of the AAVE tokenomics.
If not all the experimentations of the infamous “DeFi 2.0” period ended up with something great, the bonding system is a much more efficient way to build a non-speculative treasury.
1078/Day StkAave are more a less a 10-Day bond for 1078 (+staking rewards) AAVE
I think the market demand would exist even with small discount (50-75bps) for StkAave bonds.
At the current Market valuation of Aave and considering a 75 bps discount, a 90 day bond program in aDAI/aUSDC would add 10.6M$ of yield generating stables in the treasury.
at a conservative 2% yield for aUSDC and aDAI (current yield are lower but I don’t see this trend last), the discount would be “repaid” by interest collected in less than half a year.
Enough to fund both BGD labs and Most of Aave grant DAO budgets in 2023.
that’s up to the community to decide on this but I’m personally against this ARC for the time being.