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Aave’s Bold Move: $3 Million Acquisition of wstETH and rETH in New DeFi Governance Proposal

The Aave Community Considers New Governance Proposal to Acquire WstETH and rETH

Aave, one of the leading decentralized finance (DeFi) projects in the industry, is currently undergoing a governance proposal that will determine whether the project’s treasury will allocate $3 million to acquire the wrapped ether (wstETH) and rETH tokens. This proposal aims to enhance the yield offered by Aave’s deposit platform and diversify its offerings.

The proposal, posted on the Aave Governance Tracker, suggests adding rETH as collateral to Aave v3 Optimism and including it in the ETH correlated eMode. This will provide users with a choice between various liquid staking tokens (LSTs) and expand Aave’s offerings on the platform. The proposal can be voted on by the AAVE token holders.

These tokens, wstETH and rETH, are associated with the liquid staking platforms Lido and Rocket Pool, respectively. They represent liquid assets that can be used while staking on the Ethereum Beacon Chain. Individuals interested in Ethereum proof-of-stake can either delegate 32 ETH and become a validator themselves or utilize intermediary platforms like Lido and Rocket Pool to obtain liquid tokens. These tokens have gained popularity within the DeFi space due to their liquidity and potential yield.

To transform the low-yielding awETH and ETH assets into higher-yielding options, the proposal suggests the following steps:

1. Withdraw 1400 awETH from Aave V2 and convert it all to ETH
2. Withdraw the remaining ETH from the treasury (104 units)
3. Withdraw 96 awETH margin from Aave V3 and convert it all to ETH
4. Deposit 800 ETH into Rocket Pool’s pool, resulting in 800 rETH
5. Deposit 800 ETH into Lido’s pool, acquiring 800 stETH
6. Wrap 800 stETH into 800 wstETH
7. Transfer all 1600 units of wstETH and rETH into the Ethereum collector contract

As of now, the proposal has received 252,000 votes in favor, out of the required 320,000 to reach a quorum and be implemented. There have been no votes against the proposal. If the minimum number of delegations is not met, the proposal will conclude in two days.

 

Aave DAO currently holds 1,786.51 awETH (v2) and 104.548 units of ETH in the Collector Contract. The awETH deposit yield in Aave v2 earns 1.69%, relative to 3.8% with wstETH and 3.13% with rETH. This AIP converts all the unproductive ETH balance, along with aWETH (v2 and v3) into the same amounts of wstETH and rETH.

Aave Token Price Analysis and Future Forecast

Over the past seven days, the price of the Aave token has experienced a significant bullish trend. Starting at around $60 on June 28, the price has risen to its current value of $75.4. Although there is currently a downward phase in the price action on a 15-minute timeframe, the overall structure remains intact.

Aave has a market capitalization of $1 billion and a trading volume of $231 million in the last 24 hours, marking a 50% increase from the previous day’s transactions. A broader analysis on a weekly timeframe reveals that the recent price increase is only a minor recovery from the significant breakdown recorded since the all-time high.

Since reaching its peak, the Aave token has experienced an 88% decline and has yet to fully recover. However, despite this, the cryptocurrency’s price has been consolidating for over a year, indicating the potential for a bullish return in the coming months.

 

 

In the last three weeks, trading volumes have significantly increased, accompanying the recent rally and providing further possibilities for a bullish continuation. However, it is essential to observe the price’s ability to break through resistance levels, such as $125 and $200, to assess its feasibility of returning to new all-time highs.

Additionally, monitoring the total value locked (TVL) in the Aave protocol will provide insights into the project’s performance. While the TVL is currently showing some recovery, it remains below its peak performance.

In Conclusion

Aave, a prominent DeFi lending protocol, is currently considering a new governance proposal to acquire wstETH and rETH tokens. This proposal aims to enhance the yield and diversify the offerings of Aave’s deposit platform. The Aave token has shown bullish momentum in the past week, but it still has a long way to go to recover from its all-time high. Continued price analysis and observation of the TVL will aid in assessing the future performance of the Aave token and the success of this governance proposal.

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