As a Lido DAO contributor, we are very grateful for the continued collaboration from the Aave community. Much of the success of stETH can be attributed to the quality of the marketplace that Aave has built. In fact, Aave has single handedly contributed more to the utility and adoption of stETH than any other protocol.
This proposal to form a Lido Aave v3 instance has the potential to bootstrap the next phase of stETH growth. The staking (and re-staking) industry is evolving faster than ever and many contributors to Lido DAO believe this proposal can help provide the market with some maturity and provide users with time-tested stability. The Lido Aave v3 instance is not only an opportunity to isolate risks, but a mechanism to provide dedicated incentives for stETH users and the growth of Lido Alliance around it.
To address a few of the questions that have been raised:
- Aave DAO will be the sole recipient of revenue generated from the Lido instance. The instance is to support stETH and the Lido Alliance not to generate revenue directly from it.
- While a lower RF may optically have an impact on Aave DAO revenue, through growth we believe it will accelerate value accrual to the DAO. It is our opinion that this instance can be the foundation for a new phase of growth in collaboration with Lido Alliance members, more than offsetting the lower RF.
In effect, there is an opportunity to uniquely support as well as mitigate the risk from the growth of stETH. The proposal marks the beginning of more explicit support from Lido DAO as it promises to cultivate the stETH ecosystem. With that in mind, the reWards committee has pre-committed 225 stETH as a first step to incentivize the adoption of this instance.
In parallel, contributors at Lido DAO are working to coordinate additional forms of support to ensure the success of the new instance.