[SGR] Create stkGHO Gauge


title: [SGR] Create stkGHO Gauge
author: @TokenLogic + karpatkey - Aave DAO Service Providers
created: 2024-06-06
Target Pair: PT-sw-stkGHO / sw-stkGHO 0xe7ad3016d46e538c9ca87e5071c561a73ed1c98c
IBT Contract Address: 0xa94ec39c91DF334DCAb55aDaA8EdD9C1dAF67cA7
Twitter Link: x.com
Network: Ethereum


Simple Summary

This publication proposes creating a gauge for the stkGHO integration, launched 5th June 2024, to incentivise liquidity of LP-sw-stkGHO.

Background

Screenshot 2024-06-05 at 20.51.40

The Aave Protocol is a decentralized liquidity protocol deployed across many EVM compatible networks including but not limited to Optimism, Arbitrum, Avalanche and Polygon. The Aave Protocol has over $20 Billion in TVL and $100M in annualised revenue.

GHO is a decentralized multi-collateral stable coin that is fully backed, transparent and native to the Aave Protocol. Some useful links relating to GHO are provided below;

Motivation

The Aave DAO’s stkGHO token represents users GHO deposits within the Aave Safety Module (SM). stkGHO holders receive the base AAVE emission rewards and bonus GHO emission rewards by participating the Merit points program managed by the Aave Chan Initiative. The Merit program has an annualised budget of $20M with the majority of this to be used for promoting the adoption of GHO.

The stkGHO integration by Spectra enables PT Holders to gain access to fixed yield whilst YT holders receive yield from stkGHO. Traders can swap between the PT and YT as a way of speculating on shortfall events and the net change in yield:

  • YT’s yield is correlated to AAVE’s price
  • YT is inversely correlated to stkGHO TVL
  • YT benefits from yield without exposure to slashing risk
  • PT absorbs losses from a shortfall event

Benefits of this Integration for Spectra

First Mover Advantage: By creating a first of kind product that offers access to the Aave SM stkGHO yield, via YT, without exposure to the slashing risk which is contained by the PT position.

Increased Visibility: By jointly promoting this first of kind product, it will create awareness of Spectra within the Aave ecosystem and the broader DeFi ecosystem. Eg: Marc Zeller’s X post who 86k followers.

TVL Growth: stkGHO integration is the highest yield opportunity for Spectra users and is expected to attract a meaningful portion of new deposits seeking long duration stable coin yield.

Benefits of this Integration for Aave DAO

Potential APW Bribe: With the Aave Liquidity Committee (ALC) supporting the adoption of GHO, there is the opportunity for APW bribes as means of enhancing the yield to Spectra users with the intend of driving demand for GHO being acquired and deposited into stkGHO via Spectra.

GHO Demand Driver: If bribes are proven to be an efficient tool of attraction deposits into stkGHO, adjusting APW incentive rewards could become an effective tool to help maintain GHO’s peg.

Community Poll

Voting options:

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

Disclaimer

TokenLogic and karpatkey receive no compensation beyond Aave protocol for the creation of this proposal. Both TokenLogic and karpatkey are delegates and service provider within the Aave ecosystem.

Copyright

Copyright and related rights waived via CC0.

3 Likes

I support this proposal

1 Like

I am in favor of this proposal. I am excited that Spectra will be the first yield protocol to offer discounted GHO in DeFi. The gauge will help deepen its pool!

2 Likes

Would vote in favor of this proposal. Getting the bribe market system competitive as soon as possible for value add asset classes should remain top of mind for Spectra’s strategy.