[SGR] Create LP-sw-aETH Gauge on Base Network

Gauge Requests (SGR)
1

title: [SGR] Create LP-sw-aETH Gauge on Base Network
author: @TokenLogic
created: 2025-01-06
Target Pair: PT-sw-aETH / sw-aETH TBA
IBT Contract Address: TBA
Twitter Link: x.com
Network: Base

Simple Summary

This publication proposes creating a gauge to incentivise LP-sw-aETH liquidity for aETH on the Base network.

Background

The Aave Protocol is a decentralized liquidity protocol deployed across many EVM compatible networks including but not limited to Ethereum, Base, Avalanche and Optimism. The Aave Protocol has over $34 Billion in TVL and $180M in annualised revenue.

Some useful links relating to Aave are provided below;

Motivation

The aETH token represents users’ ETH deposits on Aave v3. aETH holders benefit from earning the deposit rate by providing liquidity to the Aave protocol. Each aETH token is pegged 1:1 to the value of ETH, ensuring stability while allowing it to be securely stored, transferred, or traded. The yield generated by the aETH reserve within the Aave Protocol is distributed among aToken holders.

Through Spectra’s integration of aETH, PT holders can access fixed yields, while YT holders receive variable yields derived from aETH. Traders can dynamically swap between PT and YT to speculate on changes in yield dynamics:

  • YT yields are directly linked to Aave’s lending rates.

Benefits of this Integration for Spectra

Users will gain the ability to speculate on Aave’s deposit rates throughout the market cycle.

Users will gain access to aETH, a highly liquid and secure asset, which opens the door to diversified yield opportunities in the Aave ecosystem through both fixed and variable income streams.

The integration strengthens the connection between Spectra and Aave, offering a completely different type of pool compared to the stkGHO ones.

Potential veSPECTRA Bribe

To further encourage ETH deposits into Aave v3, the Aave DAO has the option to boost the LP-sw-aETH yield via participating in the incentive market for veSPECTRA votes to encourage users to deposit USDC into Aave v3 via Spectra.

Community Poll

Voting options:

  1. YAE - Create Gauge for aETH
  2. NAY - Do Nothing
  3. ABSTAIN

Disclaimer

TokenLogic is compensated by the Aave DAO for the creation of this proposal.

Copyright

Copyright and related rights waived via CC0.

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