LEND Holders Become AAVE Holders While Aavenomics Rule the Lender

Also, Ethereum's birthday, Dharma's Uniswap integration, MANA as MakerDAO collateral

Hello Defiers! here’s what’s going on in decentralized finance:

  • Aave released its new token economics

  • Ethereum turns five

  • Dharma integrates with Uniswap

  • MakerDAO approves MANA as collateral

and more :)

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Aavenomics Now Rule DeFi’s Third Largest Lender

By Cooper Turley

DeFi lending platform Aave is upgrading its protocol’s internal economics and incentives with a focus on safety.

As part of the new system, called Aavenomics, users will swap LEND tokens for new AAVE tokens.

Token holders will be able to redeem LEND at a rate of 100:1, with the total supply changing from 1.3B LEND to 16M AAVE. The extra 3M AAVE will be  allocated to an Ecosystem Reserve to incentivize protocol growth.

The Ecosystem Reward is set to be distributed between safety and ecosystem incentives. The exact parameters of each will be decided in a forthcoming Genesis Governance poll marking the start of the AAVE migration.

Underpinning Aavenomics is a Safety Module in which AAVE is staked as insurance against deficits in exchange for AAVE rewards and the lion’s shares of protocol fees. The Safety Module will feature an 80/20 AAVE/ETH Balancer pool - allowing savvy LPs to benefit from BAL liquidity mining.

For protocol users, Aave will release a liquidity mining program of its own, rewarding those who supply and borrow capital with AAVE tokens. Aave will favor suppliers over borrowers to mitigate users trying to game imbalances. This is in contrast with Compound Finance, which rewards lenders and borrowers equally.

Decentralized Governance

Aavenomics details a number of other governance upgrades including Aave Improvement Proposals (AIPs) and Aave Policies governed by AAVE holders.

Unique to Aave, tokens held in cold storage can be used for voting. Token holders can also delegate their vote to so-called Aave politicians.

This comes in tandem with formalized policies which dictate how different money markets operate within the Aave ecosystem.

  • Protocol policies are those which govern the overall behavior of Aave including risks, improvements and incentives.

  • Market policies define unique money markets in Aave, including supported assets, LTV ratios, and interest rate models.

Aave’s first Uniswap Money Market - allowing users to borrow against Uniswap LP tokens - will have different Market policies from the Tokensets Money Market, while both will abide by system-wide Protocol policies.

More on Aave’s extensive governance design can be found in the full paper. The first discussion regarding AAVE emissions is now live on the newly launched governance forum!

All things considered, Aavenomics marks a new chapter for the protocol for money market creation. Given its bottom-up community, it will be fascinating to watch how LEND token holders get behind the Genesis Governance poll in the coming weeks.


🎉 Happy 5th Birthday Ethereum!

Ethereum, the distributed network that serves as the base layer for most of DeFi, launched five years ago. In its short life, Ethereum has grown to become the second-largest cryptocurrency after bitcoin, surpassing it in other metrics, including in number of daily transactions and settlement value. 

Another measure of its success, as I recently wrote in a CoinDesk column, is to examine whether Ethereum builders achieved what they set out to do.

“Rather than being limited to a specific set of transaction types, users will be able to use Ethereum as a sort of ‘Minecraft of crypto-finance,” Vitalik Buterin wrote in the Etheruem whitepaper.

Vitalik listed the following applications, which he imagined could live on this protocol: Sub-currencies, Financial derivatives, identity and reputation systems, Decentralized Autonomous Organizations, insurance, decentralized data feeds, gambling and prediction markets, a full-scale on-chain stock market and an on-chain decentralized marketplace.

So, has Ethereum succeeded? Judge for yourself:


Dharma Enables Token Trading With Uniswap Integration

Users of crypto wallet Dharma can now trade more than 2,000 tokens thanks to an integration with Uniswap, a first for a mobile app. Dharma’s upgrade also includes price charts and machine-learning-driven price alerts. The Coinbase Ventures-backed company is covering all gas fees for trading, which only includes ERC20/ETH pairs for now, with plans to add ERC20/ERC20 pairs in the future.


Holders of Decentraland’s MANA Can Now Mint Dai

MakerDAO’s MKR holders voted in a July 28 Executive Vote to accept MANA as a new collateral type that can be used to generate Dai. MANA is the token linked to Decentraland, a virtual world built on the Ethereum network. The stability fee, or borrowing costs, to borrow Dai against MANA is 12% and the collateral ratio is 175%. So far, over 63k Dai, or 0.02% of the debt limit for MANA, have been minted, according to daistats.com. The move is in line with MakerDAO’s goal to add many different types of collateral to increase Dai’s liquidity and stability.

The market cap of Ampleforth's AMPL token has tanked by over 60%: The Block

The market capitalization of AMPL, the native token of Ampleforth protocol, has declined by over 60% in the last three days, The Block reported. From about $719 million on Monday, the AMPL market cap went down to as low as $262 million today before recovering slightly to $323.8 million at the time of writing. AMPL is a price-elastic token, meaning its supply adjusts in response to demand, and thus, affects its market cap.

The inside story of YFII: China's celebrated DeFi knockoff: Decrypt

YFII’s backstory, reported by Decrypt: “The new project, confusingly called “YFII,” could have been just another forked project. But a series of events that’s been unfolding is turning into it into the DeFi story of the week—and YFII into the hottest thing in China's nascent DeFi space. It’s angering DeFi proponents in the west, who say its potentially a scam and have tried to ban it, while in China, it’s becoming popular as both an investment vehicle and a political rallying cry for an emerging nationalist group of savvy, young crypto people.”


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About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.