Source: Aave Labs, Makerdao Forum; Translated by: Wuzhu, Golden Finance

On September 3, 2024, Aave Labs announced the introduction of Sky Aave Force on Twitter.

The tweet reads:

Sky Aave Force is an initiative by @runekek and @stanikulechov with an ambitious goal: to drive mass adoption and bridge the gap between DeFi and TradFi. The time to collaborate is now.

As @StaniKulechov said, DeFi protocols have matured, showing resilience and market fit. Through collaboration, DeFi can become the backbone of all finance, enabling unprecedented access and driving new use cases.

We are no longer bystanders; DeFi can empower all finance.

Sky Aave Force will propose:

  • Integrate USDS and Savings USDS (sUSDS) on Aave V3 and provide native token rewards.

  • Create new @sparkdotfi / Aave marketplace for seamless interactions and exclusive rewards.

Sky Aave Force marks the first step towards a coordinated, more resilient ecosystem with key agendas: wider accessibility, adoption, and collaborative advancement.

Makerdao (now renamed Sky) also has proposals on the forum:

Proposal for Spark integration with Aave

Following ACI’s interim review of adding sUSDS to the Aave V3 main market and USDS to the Lido market, Phoenix Labs made the following recommendations:

sUSDS supply on the Aave V3 main market is eligible to participate in the SPK pre-farming airdrop incentive program, which rewards 3.33 million SPK tokens (50% of SparkLend) every month.

USDS D3M to Aave Lido market with an initial debt cap of 100M to increase adoption.

reason

Aave is the largest lending market in DeFi with over 11 billion TVL across multiple chains. This brings many synergies to both protocols, and USDS is the largest decentralized stablecoin. We see this as the first step in a deeper relationship with Aave, aiming to promote both protocols as the core of scalable DeFi.

The Aave Protocol team has agreed to split revenue from the sUSDS and USDS markets equally with Spark.

1. sUSDS Incentive Program

sUSDS is used as a primary market asset to improve capital efficiency for lenders. Idle supply continuously earns the Sky Savings Rate (SSR), enabling market outperformance over its USDC/USDT peers. Additionally, debt is denominated in the yield version, so the minimum borrow rate is SSR.

The following formula will be used to prevent USD stablecoin recycling: sUSDS Supply - Sum_i(Stablecoin_i Borrowed Amount (in USD) / Stablecoin_i Liquidation Threshold)

The program will help Sky drive adoption of USDS after launch, and the incentive program will increase Aave’s TVL and revenue by attracting new borrowers.

The Aave team has agreed to set up rewards on the sUSDS market and will update its UI to display SPK rewards.

2. USDS D3M to Lido Market

Aave recently launched a dedicated instance of Lido for its V3 Market 2. Phoenix Labs, in partnership with Aave and Lido, proposes to deploy D3M in this market to promote the adoption of USDS and wstETH. An initial debt ceiling of 100 million is proposed, which is expected to be used until interest rates are in line with the broader market.

The collateral in the market will be ETH and wstETH which are extremely liquid, so we expect this debt ceiling to increase to meet demand. If for some reason demand is insufficient, then liquidity can be removed if the borrowing rate remains below SOFR.

D3M will use the following contracts:

  • D3MAaveV3USDSNoSupplyCapTypePool 2

  • D3MOperatorPlan (Operator: 0x298b375f24CeDb45e936D7e21d6Eb05e344adFb5 1)

The Operator Program will allow governance facilitator multisigs to adjust exposure to meet demand at a faster cadence than the staking process.

Next steps

Pending approval from the governance process, both proposals will be implemented at the next available opportunity following the launch of USDS and sUSDS tokens on September 18th.

The SPK rewards program will be launched when the market enters the Aave V3 main market.

The relevant content of the AAVE forum is as follows:

[Temporary Check] Adding USDS and sUSDS to Aave v3

summary

The proposal aims to include USDs and sUSDS, the renamed DAI and sDAI tokens into Aave v3.

motivation

DAI has been a cornerstone asset in the Aave ecosystem, with a long and successful history of supply across versions of the protocol. MakerDAO’s rebrand to Sky marks a significant milestone, introducing USDS and sUSDS as new iterations of DAI and sDAI. Given the strong track record and widespread adoption of their predecessors, we recommend that these new assets be included in Aave v3.

By integrating USDS and sUSDS into Aave v3, we aim to maintain continuity for users who rely on DAI and sDAI, while embracing the evolution of these assets under the Sky brand.

Proof of Liquidity and Deposit Commitment

The Sky Protocol team has discussed providing token incentives and liquidity provision when USDS is added. ACI is in discussions with Sky Protocol team members to finalize these plans.

specification

Based on discussions with members of the Sky Protocol team, we propose the following:

  • Add sUSDS as collateral and borrow asset to Aave v3 master instance

  • Added USDS as a supply and borrow asset for Aave v3 Lido instances

  • Integration with Paraswap allows users to seamlessly swap DAI and USDS variants within the Aave system.

We invite all service providers and community members to comment on these recommendations.

The final contract address will be provided when the Sky protocol is finally launched.

The risk service provider will provide risk parameters at the ARFC stage.

Next steps

  • If consensus is reached on this [temporary check], the proposal is promoted to the snapshot stage.

  • If the snapshot result is YAE, the proposal will be upgraded to the ARFC stage.

  • Release a standard ARFC to gather community and service provider feedback before advancing the proposal to the ARFC snapshot stage.

  • If the ARFC snapshot result is YAE, an AIP vote is issued to finalize and execute the proposal.