Let me first start my congragulations to Aave team for such an hard work and accomplishment on many innovations leading the defi world for years. I truly believe defi has long path to go, can be parabolic, and Aave can lead this trend. As I appreciated all remarkable improvement, i have to say Aavenomics is not one of them. The main concern on Aavenomics will be to mint extra 3mil tokens regardless for what will it be used. The approval of Aavenomics will be voted by the community which brings me to another major concern that the greater number of voting by random people, the greater risk of giving wrong decision. To mint extra token after white paper realeased should never be a topic for discussion in crypto world because its against the natural cause why the first crypto, BTC, was born,Unlimited supply of fiat money. Never have an perception of possible unlimited supply. Even though Aave Team says that they will vote Aavenomics, the idea of minting tokens will create fear and doubt in people’s mind if they re having thought to invest, stake and hold Aave. It can cause inflanatiory moves as well. Once people has perception of minting tokens whenever its necessary for any reason, the token will lose its value eventually. As a result, we all want to own something valuable and so far the initial, clearest and strongest reason for being valuable is limited supply in the longrun. In my opinion its better to keep it in that way. Dont create the perception of incerasing supply!
BTC supply can be adjusted if enough people decide that its necessary. Its just code.
In the case of AAVE its important to note what the tokens will be used for and thats utility / security / etc incentives. This is good for the protocol and will encourage broader usage which means indirect / direct benefit for AAVE holders.
AAVE isn’t the first protocol to consider a controlled inflationary approach. You could actually make the case that the inflationary approach of AAVE is relatively tame in comparison to others (IE: COMP).
I don’t think it’s right to compare BTC’s supply/policies with that of another cryptocurrency IMO, it’s comparing apples to oranges.
However as far as addressing inflation, the extra tokens aren’t going to just be given to the team (which I wouldn’t support), but they’ll be used for various things that are going to both help grow and secure the platform, with only 0.5 million being minted in the first year, so I personally support it.
It’s perfectly balanced, as all things should be (in Thanos voice). But really it is only a matter of setting up the initial parameters for incentives now, as the proposed governance architecture is very robust and comprehensive. Me likes it.
Looks good to me. Sure " burn good, print bad" is true as a general guideline, but it’s not an absolute.
What you absolutely don’t want indeed is tokens being printed and handed out to team members to basically sell off at will, or surprise minting. So it is important that the smart contract makes sure that there will be no more tokens minted after this initial one (which requires long term planning for how to manage incentives in the future all this one time 3M pool).
That being said in the big picture, if these tokens are all used to incentivise the community to stabilise and grow the ecosystem they will ultimately increase the AAVE price rather than decrease. Why? Because defi is some bubble heavy shit. That’s also a good things, and we are early bubble stage, but as the godfather Vitalik Buterin himself said that also means that irresponsible people will try to get rich off of irresponsible and unsustainable platforms: and it is exactly through the measures as proposed by the team that AAVE differentiates from that in staying responsible and sustainable. And the community is needed for that and the best community effort is one with fair incentives.
And these tokens will anyway hit the market earliest in 1 to a few years getting released to community contributors slowly and by that time I am sure that the natural growth of a healthy and sustainable ecosystem will rocket the price up way more than the inflationary effect of these tokens. Even more as soon as the first existing or emerging AAVE competitors with unsustainable yield farming lures get their bubble popped when the chips are down. Especially if fee burns remain, partially the effect will mitigated over time anyway (be it very slowly).
I understand your concern, but please also consider the following:
- you cannot compare AAVE to BTC or any other project but since you are, you can also look at ETH which has no supply cap and shows no sign of loss in value, also look at SNX whose growth can be attributed to a great rewards system among other reasons
- contributors to the Safety Module and liquidity providers must be rewarded for their contribution and a “reward from fees” would not be a great enough incentive to ensure growth and security
IMO looking at the extra 3m tokens from only a price perspective does not paint the whole picture and I support the swap and the supply figures proposed by the team.
Example of MakerDAO has shown that a reasonable approach to minting new tokens (I talk aboun MKR tokens) only affects the price of a token in a short term perpection. Not in the long term.
This seems like a strong assumption.
On a philosophical point of view, democracies have their flaws but taking “wrong-er” decision than autocracies isn’t one of them. It might be slower to get things approved, and less extreme (both ways: good or bad), democracies are more “channeled”.
If you are part of a community, sharing investments/ideologies/interest, you probably have many peeps, with different backgrounds, opinions, etc. Decision making should end-up more round.
However, on the velocity aspects, the governance model could be built in a way to fasten decision making while keep safety-nets. DeFi, is moving at a crazy speed, and and it seems, governance shouldn’t be in the way to fast evolution.
Why not issue a new token named AAVE for incentives and keep the original token LEND not change?
I love the idea. It’s great!
I have a question about promotion to the general public:
Is there any part of the after/after that will be used to promote the service? Or it’s not the model at all, but if some of it is used for advertising, promotion, campaigning, then we attract people and we’ll grow more.
I don’t think that any of the allocation is specifically for marketing/promotion, I think the team would still be responsible to market as they see fit.
It’d be cool to see a marketing DAO or something of the sort into the future when/if it becomes necessary IMO.
I confess I’m having a hard time understanding why a new ERC20 is necessary and I don’t understand why they can’t change the existing LEND tokens to accommodate/expand the set of things that they want their tokens to do.
One of the things that I liked about the LEND token was that they would periodically burn tokens. This meant that it was a deflationary token. Now, they’re taking away those gains, and I definitely have a few concerns around that.
Burns are fun but what do they actually accomplish apart from giving hope eventually the “last man standing” will have a “scarce” and valuable asset? It’s unclear to me what the value proposition is of burns apart from attracting some degree of short term interest.
Sustainable value comes via use of the protocol and controlled incentives to 1) secure and 2) use the protocol … this seems far more strategic to me than burns.
+1 to this. Aavenomics is meant to act as a catalyst for future growth.
While adding tokens to the supply can be daunting, the exciting part is that the community gets to decide exactly how they’re allocated.
We can effectively view the Ecosystem Reserve as inflation which is exactly how major DeFi projects like Synthetix have been able to create multi-billion dollar ecosystems which favor value added participants.
The way I see this upgrade - if you’re adding value to the ecosystem by staking and using the protocol, you stand to benefit more than the passive tokenholder which IMO is a huge step in the right direction
I agreed with this guy. New tokenomics is a red flag and must not be approved. It is as if 300 million LEND being minted in proportion to current supply. Other projects are splitting their supply like polkadot will multiple balances by 100 times.
No, I do not believe inflating the total supply of Lend to Aave approximately 23 percent, to set aside a percent of the total value of the community to be redistributed to future stake holders and Aava ecosystem (if voted to do so and not changed in the future by governance) is a good plan. Alternatively as a community we should be the ecosystem that protects the current value of its current supply from inflation. It would be nice to at least start looking into alternative plans for how to reward Lend token holders for staking and governance other then inflating the supply of the token and redistributing it to them.
Just wanted to say I think the recent reduction in the origination fee was a great call : https://twitter.com/AaveAave/status/1290654201148780549?s=20
Nothing could be less important right now that current revenue and token burns.
A possible compromise to partially lower the inflation when moving from lend to Aave:
Set the origination fee back to .01%, in this way lend burn will continue, when moving from lend to Aave don’t count the burned lend when moving from lend to Aave at 100:1.
For example ( these number are for illustration purpose):
If the total supply of lend were down to 1,000,000,000 at the time of transition then the max supply of Aave would be 13 million, 3 million Aave would still be set aside as per Avenomics. In this way the value of lend would only be inflated back up to its original total value instead of the 23 percent over the original lend issuance as currently planned.
I am a big fan of aavenomics as it is, but after reading @Socratic9’s post I want to ask a question because I haven’t quite worked it out, will the burned LEND be brought back into supply with the transition to AAVE?
The burned LEND wont be brought back, just what is manually migrated + the 3M for the reserve & incentives.
So it is likely that much less AAVE will be circulating than what’s in circulation for LEND now (after 1:100 of course).