According to Cointelegraph, decentralized finance (DeFi) protocols Aave and Sky (formerly Maker) are considering a partnership aimed at bridging the gap between DeFi and traditional finance (TradFi). This initiative, named the Sky Aave Force, was announced on September 2 following a governance proposal by Phoenix Labs, a DeFi research and development organization.
The proposal includes issuing SPK tokens, native to Sky’s subDAO, Spark, to establish a market for USDS, a stablecoin launched after Maker’s rebranding to Sky in August. Aave Labs, the developer behind the Aave DeFi lending platform, emphasized the partnership's goal to drive mass adoption and close the gap between DeFi and TradFi.
Phoenix Labs suggests distributing up to 3.33 million SPK tokens monthly to incentivize an Aave v3 market for Sky’s sUSDS, a yield-bearing token representing deposits in the Sky Savings Rate (SSR) program. Similar to the DAI Savings Rate (DSR) program, SSR provides yield to depositors from the revenues generated by Sky’s protocol. Idle sUSDS on Aave would consistently earn the SSR, potentially outperforming USDC/USDT counterparts.
The proposal also includes introducing a USDS Direct Deposit Module (D3M) to Aave’s Lido Market, with an initial debt ceiling of $100 million. Aave partnered with Lido, the leading Ethereum staking protocol, in July to create a lending market for wstETH, a liquid staking derivative representing a claim on Lido’s ETH staking pool. The D3M would allow Sky to mint USDS directly into Aave’s market without needing to meet the usual collateral requirements.
Phoenix Labs highlighted the synergies between the two protocols, noting that Aave is the largest lending market in DeFi with over $11 billion in total value locked (TVL) across multiple chains. They view this partnership as a first step towards a deeper relationship with Aave to promote both protocols as the core of scalable DeFi.
