Aave and Sky forge alliance to turbocharge the DeFi ecosystem
Key Takeaways
- Aave and Sky partner to integrate new tokens USDS and sUSDS into Aave platform.
- Collaboration aims to boost USDS adoption and increase Aave’s total value locked.
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Decentralized applications Aave and Sky have announced a joint effort to take the decentralized finance (DeFi) ecosystem to the traditional finance realm.
Named Sky Aave Force, the effort consists of these decentralized applications sharing seamless integrations with their products.
Aave introduced a proposal on Aug. 28 to include Sky’s new token Sky Dollar (USDS) and Savings Sky Dollar (sUSDS), the upgraded versions of the protocol’s stablecoin DAI and Savings DAI.
If approved, the proposal would provide all the features DAI and sDAI already have within Aave, including the possibility of being used as collateral, borrowed, and swapped through Paraswap.
Meanwhile, Sky introduced a proposal on Sept. 2 explaining that the idle supply of sUSDS used as collateral on Aave will be eligible to earn Sky Savings Rate (SSR), the yield feature related to USDS.
“This program will help Sky to boost adoption of USDS after launch, and the incentives program will boost Aave’s TVL [total value locked] and revenue by attracting new borrowers,” Sky’s proposal read.
Moreover, users who opt to use sUSDS as collateral on Aave v3 will also be eligible for the pre-farming airdrop of SPK, Spark’s token. Spark is the money market tied to the Sky ecosystem.
The Aave team has agreed to place rewards on the sUSDS market and will update their UI to display the SPK rewards.
Sky’s proposal also suggests the creation of a Direct Deposit Module (D3M) within Aave’s Lido-specific instance. This would allow a smart contract to transact USDS tokens from Sky directly to a lending pool on Aave, something that the proposal states would boost the adoption of USDS and wstETH.
RWA-focused movements
The Sky Aave Force comes days after both Aave and Sky made movements focusing on real-world assets (RWA) integrations.
Sky is the new brand of MakerDAO, which introduced two new versions of its tokens: SKY and USDS. While SKY is the upgraded version of the MKR governance token, USDS is the upgraded version of the DAI stablecoin.
The idea of upgraded versions of MKR and DAI was first formally shared in a May 15 blog post by MakerDAO co-founder Rune Christensen. The idea behind it is to make USDS more compliant with the jurisdictions it is offered, so the stablecoin can be used in RWA applications in the mainstream.
Moreover, Aave introduced a proposal for a new GHO Stability Module (GSM), which consists of using BlackRock’s tokenized fund BUIDL’s shares to get extra yield to its stablecoin holders.
After a user swaps USD Coin (USDC) for Aave’s GHO, the smart contract will be able to swap the USDC amount for BUIDL’s shares. As BlackRock’s fund generates yield daily, GHO holders will have an extra avenue for value accrual.
Additionally, this integration could be a way to start more partnerships between Aave and BlackRock on the RWA front, according to the proposal.
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Author: Gino Matos
