[ARFC-Addendum] Update Boosters for Merit Round 7

[ARFC-Addendum] Update Boosters for Merit Round 7

Author: ACI (Aave Chan Initiative)

Date: 2024-07-25

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Simple Summary

We propose updating Merit parameters and rewarded actions to increase program efficiency for Round 7.

Motivation

The Aave protocol has maintained and developed its market share in DeFi in a highly competitive landscape thanks to the Merit program. Recent rounds of Merit have been successful, and we aim to build upon this success while adapting to new strategies and market conditions.

Merit aims to maximize efficiency while being conscious of the budget weight of this program. Therefore, it needs to be updated and adapted when new strategies can be applied.

Specification

Boosters Update

1. Retain and Expand: Expansion of Second Degree Aligned Users Booster: This booster will reward users of Defisaver and now also Gnosis Safe, recognizing their importance in the broader DeFi ecosystem and encouraging their integration with Aave.

2. Remove:

   • "Diversity supporter" LST boost. This will be replaced by a dedicated boost for the Etherfi Aave market, allowing for more targeted incentives.
   • GHO minting rewards in favor of StkGHO. With the recent policy to tap the GHO borrow rate to match the MakerDAO DSR, the cost of minting GHO was decreased significantly, leading to a "Net" borrow rate below markets, especially for users also benefiting from the StkAAVE discount. This has made the maintenance of the peg of GHO more difficult as the carry trade opportunity has been seen as attractive for some users. We consider it more efficient to focus Merit on StkGHO for Round 7.

3. New Addition:

   • Etherfi Aave Market Boost: A new, dedicated boost will be created to support and incentivize participation in the Etherfi Aave market, recognizing its unique position in the ecosystem This expansion is contingent on Governance approval of its deployment

Next Steps

1 escalate this [ARFC-Addendum] proposal to a Snapshot vote for formal approval. 2. If [ARFC Addendum] is approved in the Snapshot phase, apply changes to Merit Round 7.

Disclaimer

The Aave Chan Initiative independently proposes "Merit" without external compensation.

Copyright

Copyright and related rights waived under Creative Commons Zero (CC0).