DeFi lending protocol Aave has launched its new governance framework
DeFi protocol Aave launches new governance framework on Ethereum mainnet, the Aave team announced on September 25.
Aave Governance is officially on mainnet, giving the decisional power to the community! Now it’s time to vote on the very first Aave Improvement Proposal (AIP) for the token migration from $LEND to $AAVE.
Thread on how to vote⬇️
Blog post for details: https://t.co/Z09ajBmb2Y
— Aave (@AaveAave) September 25, 2020
Aave Governance was previously run on the Kovan and Ropsten testnets, where users could trial voting on Aave Improvement Proposals (AIPs). With the launch on mainnet, Aave users can now vote on the first official AIP, which focuses on a planned token migration.
The first AIP, “AIP1,” is the proposal to migrate from the LEND token to the AAVE token, making it the new governance token of the Aave Ecosystem. LEND and aLEND holders can all head over to the DApp and vote.
If the vote is in favor of the token migration, then post-migration AAVE holders will be able to stake their AAVE in a Safety Module (SM) and earn AAVE as a Safety Incentive (SI) in exchange for securing the protocol. Later, a percentage of protocol fees may also be added as a SI if the governance approves. The SM will act as a recapitalization mechanism, so in the case of a shortfall event, your stake may be slashed up to 30% to cover the deficit. The idea behind “safety mining” is to reward community members who stake their AAVE to promote the safety of the protocol.
At a later date, staking plain AAVE, along with an AAVE/ETH pair leveraging Balancer to earn BAL and trading fees, will be built with incentives decided by the governance.
The rewards will be distributed when you withdraw your AAVE or transfer it from the SM.
All the LEND and aLEND in your wallet can be used for voting.
If the proposal is approved, the migration will be automatically activated. Anyone will be able to migrate from LEND to AAVE, and this will be a gradual process unless the governance votes on a deadline. The staking will also be activated, but stake slashing will not yet be initiated as an incentive to bootstrap liquidity. Post-migration, all AAVE and staked AAVE (stkAAVE) in your wallet will be able to be used for voting.
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