The dispute over the ENA protocol has reached a boiling point on Crypto Twitter, just as over $500 million worth of ENA was distributed in the first round of airdrops to eligible investors through Athena. Why are two blue-chip DeFi protocols now at odds over Athena?
Yesterday afternoon, a governance proposal was posted on the Maker forum, calling for representatives to consider increasing the capacity of the recently established USDe and sUSDe lending facilities on Morpho from 100 million DAI to 600 million DAI, with the ability to extend this limit to a maximum of 1 billion DAI. The majority of funds will be lent out with a loan-to-value (LTV) ratio of 86% or higher.
The move by Maker to incorporate Athena’s synthetic stablecoin as collateral for DAI is aimed at boosting the adoption of DAI, as its market dominance has significantly declined, with the stablecoin plummeting by 20% since the beginning of the year.
In response to Maker’s governance proposal, Aave contributors launched their own proposal seeking to set the LTV for DAI to 0% across all Aave deployments, effectively eliminating the ability for users to borrow against DAI as collateral.
What has confused many is that Aave has shown willingness to include Athena’s sUSDe in its Ethereum V3 deployment, with a temperature check on March 19 receiving almost unanimous support. This starkly contrasts with the protocol’s instinctive reaction to Maker’s recent efforts to increase lending activity against the token.
While DAI loans conducted through Aave have the potential to be risk-isolated, similar to how future sUSDe markets might operate, Aave is no longer willing to bear the increasingly growing risks. Maker has indicated its commitment to increasing DAI supply and revenue.
Aave founder Stani Kulechov reiterated this view, proposing the complete removal of DAI from all markets and stating that he believes “the value of Aave DAO is not significant with the new risk direction that MakerDAO is taking.”
Given the high yields of Athena stablecoins, with sUSDe generating the highest returns among its peers through funding/pledge payments, and USDe offering substantial airdrop rewards, there is a high demand for leverage on these assets, with holders willing to pay the fees to acquire them.
Although only 2% of circulating DAI supply is currently being used as collateral for Maker’s Athena lending business, these loans offer an annualized return of 36%, contributing 10% to Maker’s expected revenue.
While Maker’s increasing adoption of Athena assets as collateral undoubtedly increases the risk profile of DAI to some extent, Aave’s retaliatory response feels harsh and can be seen as an attempt to further support GHO, its own stablecoin and a direct competitor to DAI. The governance proposal considered the potential benefits of integrating Athena with Aave to support the sUSDe market.
Tags:
Athena
Bankless
DeFi
Maker
Jinse Finance
Source: Aave Governance
Note: The views expressed in this article are solely those of the author and do not constitute investment advice.
Original article link: https://www.bitpush.news/articles/6565015
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