This publication proposes amending daily AAVE emissions across the three Safety Module (SM) categories to support GHO stability.
Motivation
With the introduction of stkGHO, GHO went through a positive price action and recovered the 1:1 peg.
Since then, however, the price of GHO has been drifting. There is an additional risk of GHO being redeemed from the SM and sold in the market. There are currently around 5.2M GHO cooling off from the stkGHO module.
To support the GHO peg and to pave the way for future GHO supply expansion, this publication proposes increasing the daily AAVE emission going to stkGHO holders.
This publication also proposes to offset this increase in AAVE emissions by reducing the emissions directed to stkAAVE and stkBPT holders. The overall amount of AAVE per day is to remain unchanged.
Specification
This proposal will implement the following changes to the AAVE emissions across the three SM categories:
Asset
Current AAVE/Day
Proposed AAVE/Day
stkAAVE
385
360
stkGHO
50
100
stkBPT (AAVE/wstETH)
385
360
Next Steps
Gather feedback from the community and risk service providers.
If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
If Snapshot outcome is YAE, escalate this proposal to AIP stage
I generally support the direction of this proposal, but am wondering how effective it will be. Risk providers didn’t increase borrow caps by a single $, although they could every 5 days*. As long as this stays the behavior any added “incentive to borrowing” is useless and just benefitting first users imo. I don’t want to buy a unstable stablecoin at/(slightly below) peg when i should be able to just borrow and simply market buy the accrued interest to payback at some point.
GHO usecases are still rare besides farming, IMO might make sense for cross-chain to move forward whatever the state on this is. Would be good if you could use GHO on gnosis pay or similar.
Arguably stkAAVE is far more useless than stkABPT in a case of shortfall. Perhaps would make more sense to decrease stkAAVE rewards more than stkABPT. There is no good reason for them to be the same, especially as stkAAVE has the benefit of GHO discount which stkABPT has not.
Idk if in fact “risk” is the reason for not increasing or sth different (peg concerns or whatever…). Seems odd that not even small increases are done.
I would suggest the following for GHO. Load up GSM, activate cross chain GHO, raise bucket to 70-100m and start Merit.
Cross chain GHO depends on Avara. Communication is quite rare. And I think most people want to see GHO first holding it’s peg some more time before opening bucket size.
Sounds like a plan to me. steward would allow a more gradual and incremental increase from 35 → 50M cap
I’m in favor of this as soon as we bump StkGHO rewards
This proposal’s goal is to improve the current GHO’s use cases to build a stronger foundation for new supply increases (as going cross-chain, for example). Historically, price action reacted positively to stkGHO updates. GHO price has been much better lately, but there is still a margin to improve price volatility that could suffer with a premature increased supply.
I am not sure to understand the full logic behind this ARFC.
Current stkGHO is already yielding 15.75% … that’s already very competitive for a stablecoin. Directing further SM emissions towards stkGHO might have an adverse impact on AAVE token utility by reducing its SM yield. I wonder whether such a move would reduce GHO utility to this sole stkGHO opportunity instead of diversifying its usage across defi.
What about reducing GHO borrow rate instead in order to rebalance its attractiveness ?
An AIP will soon be submitted to renew the AAVE emission to stkGHO holders at the same rate of 100 AAVE/day. The AIP will also contain an Allowance that supports the distribution of AAVE to stkGHO holders who have missed out on rewards over this period by the ACI team. We expect the proposal to have completed peer review shortly and be live for voting soon thereafter.
Disappointed but not surprised to see the this was not renewed in time, but I’m happy to hear about the allowance.
It looks like ~4m GHO has been cooling since this lapse, and hopefully the allowance will keep them from leaving.
A proposal will be submitted to extend AAVE emissions for stkAAVE holders for another 180 days, following the completion of the recent reward cycle. The stkAAVE module has proven to be a key component of the AAVE ecosystem, serving as an effective AAVE supply sink with a TVL of $480M, representing 18.8% of the total supply.
Given the successful renewal of stkGHO rewards, this proposal seeks to maintain the same principle by sustaining incentives for stkAAVE holders. It aims to preserve the module’s functionality and prepare for future Umbrella developments, with potential adjustments following the upgrade’s outcomes.
The emissions will continue at the current rate of 360 AAVE/day, and the distribution will be extended for an additional 180 days from the execution date. More information on stkAAVE performance and metrics can be reviewed in the linked dashboards. Importantly, TokenLogic and karpatkey have no financial stake in this proposal.