This publication proposes renewing the AAVE emissions to stkGHO holders for the following 180 days.
Motivation
With the completion of the last reward cycling, this proposal seeks to renew the protocol $AAVE emissions to the Aave stkGHO holders. The stkGHO module has been instrumental in GHO growth, and momentum should be kept in view of future umbrella developments.
AAVE emissions are to co-exist with the on-going Merit program.
More information on stkGHO can be found in these dashboards, here and here.
Specification
This proposal will implement the following changes to the AAVE emissions across the three SM categories:
Asset
Current AAVE/Day
Proposed AAVE/Day
stkGHO
100
100
The distribution end for 180 days from Execution date.
Disclosure
TokenLogic and karpatkey receive no payment for this proposal.
Next Steps
Using the Direct-to-AIP process, submit a proposal for vote.
Fully supportive of this proposal, I think it’s particular important to keep the momentum going to keep GHO relevant in the current environment. Many new stablecoins are emerging, so it’s important to do whatever possible to establish GHO as one of the top tier solutions.
The token allocation should be increased. At the current rate, the APY for staked GHO lands between 4 and 5%, while holding your stablecoins on, e.g., Coinbase nets 5.1%. However unlikely a slashing event is to occur, the risk of up to 99% slashing should results in a higher APY. To maintain a higher APY, GHO staking should be capped at some value that balances protocol safety with higher returns. I see the need for a bump here as independent of the rewards under ACI management, as they are temporary and have a different incentive structure.
In my opinion, increasing the rewards is not necessary for several reasons. Firstly, I believe the purpose of a stablecoin should not be to remain locked in a smart contract solely to generate incentives; GHO should primarily serve as a liquidity tool, not a yield-bearing asset. Additionally, ACI already provides substantial rewards for depositing GHO, and while this is temporary, it is still in effect and should continue for the full 180 days outlined in the proposal. Finally, it seems to me that the current demand for GHO is sufficient, so there is little justification for increasing AAVE rewards. Doing so would likely mean reducing rewards for AAVE or ABPT stakers, which, in my view, might be counterproductive in the present context.
I broadly agree with the proposal to renew the merit program for another 180 days (full disclosure have benefited from it personally) with a proviso.
With the introduction of the “Umbrella” program likely soon to be presented to the DAO & pending governance approval, I think a review of the merit program after this 180-day period would be prudent, should this proposal pass.
I really do believe “Merit” has been a significant success in attracting and retaining funds/users to Aave, bootstrapping GHO, increasing revenue and, as as GHO continues to expand in distribution and maturity with GHO on Arbitrum, soon to be Base and potentially on Avalanche just think after this 180 period (assuming it passes) then that would be a prudent time to review Merit in its current form as it would have been close to a year since its original implementation.