LBS Blockchain Society Delegate Platform

[ARFC] Merit - A New Aave-Alignment User Reward System

Vote Result: YES


As voted in the Merit TEMP CHECK according to our rationale here, we are in favour of the Merit experiment. Making it clearer that the rewarded actions are to borrow wETH and borrow GHO, which are especially profitable for the DAO, simplifies the program and is a step in the right direction. This will help with GHO borrows, increase usage of GHO, and drive revenue to the DAO, which is the right call to make.

The arguments that this proposal is ‘unfair’ because of the 100% dilution for using non-aligned protocols like Morpho Optimizers do not make sense. Firstly, the dilution is only of rewards, not anything else - which is completely fair, since using the Optimizers diverts from Aave protocol revenues. The DAO is completely in the right to reward users who bring more revenue to the protocol, and not reward those who drive revenue away. This is a form of incentive alignment that is only possible in crypto. Secondly, the reward system incentivises users to use Aave and not other competitor protocols - this is standard business practice and cannot be seen as anti-competitive, especially since Aave DAO can and should protect its revenues. Lastly, using $5M of Aave’s own profits to reward users doing more profitable actions for Aave, in turn driving increased revenue and profit to the protocol, make sense - especially as the first iteration of this program.

Therefore, we will vote YES in favour of this ARFC.

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