AAVE Surges as Holders Vote to Convert 1,600ETH into rETH and wstETH

12:53 pm
July 5, 2023

Aave (AAVE) tokens have experienced a significant boost as AAVE holders vote on a governance proposal to convert 1,600 ether (ETH) into equal amounts of wstETH and rETH. The proposal aims to increase the staking yields for Aave and provide liquidity through liquid staking derivatives.

The Aave DAO, which currently holds 1,786.51 awETH and 104.548 ETH in its Collector Contract, is seeking to convert unproductive ETH balances and aWETH into wstETH and rETH for higher staking yields. With the majority of voters in favor of the proposal, Aave aims to maximize its yield on the deposited ETH.

Currently the third-largest DeFi protocol with a total value locked of $6 billion, Aave has seen the AAVE token surge over 26% in the last seven days, indicating a long-term bullish trend. The proposed conversion is expected to further enhance the growth and profitability of the Aave ecosystem.

Why Convert to wstETH and rETH?

The primary motive behind the proposal is to increase the staking yields for Aave. By converting the unproductive ETH balance and aWETH into wstETH and rETH, Aave will be able to earn higher yields compared to the existing yields generated from holding awETH in Aave v2. The conversion will enable Aave DAO to earn 3.8% and 3.13% for holding wstETH and rETH, respectively.

In addition to the higher yields, the conversion to wstETH and rETH allows Aave to stake tokens and earn a yield while still maintaining liquidity through the liquid staking derivatives. This provides Aave with a dual benefit of earning staking rewards while also being able to access its staked tokens when needed.

FAQs

What is Aave?

Aave is a decentralized finance (DeFi) protocol that enables users to lend, borrow, and earn interest on digital assets. It operates on the Ethereum blockchain and is known for its innovative features and high liquidity.

What is wstETH?

wstETH stands for wrapped staked ether, which is a liquid staking derivative. It allows users to stake their ETH and earn yield while still being able to trade and access their tokens.

What is rETH?

rETH, also known as rocket pool ether, is another liquid staking derivative that allows users to stake their ETH and earn yield while maintaining liquidity. It provides a way for users to participate in Ethereum’s proof-of-stake network without the need for a large amount of ETH.

How will the conversion benefit Aave?

The conversion to wstETH and rETH will enable Aave to increase its staking yields and earn higher returns on the deposited ETH. It will also provide liquidity through the liquid staking derivatives, allowing Aave to access its staked tokens while still earning a yield.

What is the current status of the proposal?

At press time, all 252,152 votes that have been cast are in favor of the proposal. The proposal requires a minimum of 320,000 votes in order to be actioned.

How has the AAVE token performed recently?

The AAVE token has seen a surge of over 26% in the last seven days, indicating a strong bullish trend. It reached a daily high of $80.28 and was trading at $76.92 at the time of writing.

How much has Aave locked in its protocol?

Aave currently has a total value locked of $6 billion, making it the third-largest DeFi protocol.

Sources: CoinJournal


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