A synthesis of the Aavenomics
- Aavenomics present a governance framework to grant key decision making to AAVE tokenholders.
- The total supply of AAVE will be 16M tokens.
- 13M AAVE tokens will be redeemed by LEND token holders.
- 3M AAVE tokens will be allocated to the Aave Ecosystem Reserve.
This Flash Paper is a synthesis of Aavenomics - a formalized path to the decentralization and autonomy of the Aave Protocol.
Acting as a catalyst for growth, Aavenomics introduces a future-proof framework leveraging financial incentives and multilevel governance to prioritize the safety and sustainability of Aave.
This website is the formal documentation detailing the specific inner workings of the topics.
The migration to AAVE marks the first step in transitioning governance power from the Aave core team to AAVE token holders.
LEND will migrate to AAVE at a rate of 100 LEND per 1 AAVE, with the supply changing from 1.3B LEND to 16M AAVE. Of the 16M AAVE being issued, 13M AAVE tokens will be redeemed by LEND holders and 3M AAVE tokens will be held in an Aave Ecosystem Reserve for protocol incentives.
Staking will feature plain AAVE alongside an AAVE/ETH pair. The latter will leverage Balancer to incentivize market liquidity and earn BAL along with trading fees.
Staked AAVE will be freely tradable after a cooldown period. All rewards accrue in real-time and are distributed as AAVE is withdrawn or transferred from the Safety Module.
The community may also decide to allocate rewards to applications built on top of the Aave ecosystem. The decision to integrate new incentives will be performed through decentralized governance.
Aavenomics are fuelled by governance forums at governance.aave.com and ratified through on-chain Aave Improvement Proposals (AIPs) using AAVE. This process looks to ensure extensive discussion is had on proposals prior to being pushed on-chain. Both AAVE held in cold storage and AAVE staked via the Safety Module can be used to vote on AIPs or be delegated to Aave protocol politicians to vote on your behalf.
Protocol Policies govern the overall behavior of Aave including risks, improvements and incentives. Market Policies define the context of each market within the Aave protocol, including supported assets, LTV ratios, and interest rate models.
Aavenomics reward those bearing the most risk with the highest incentives. Aavenomics describes the process in which AAVE stakers bear any deficits along with detailed examples and explanations of protocol policies and governance interactions.