Newsletter Special: Staking Edition

Hello Aave Community!

Most of the LEND tokens have now successfully migrated to AAVE! AAVE holders can stake their AAVE in the protocol Safety Module (SM), providing an additional layer of security for the protocol in exchange for some juicy Safety Incentives (SI). This “safety mining” is a cool way to reward stakers for actively working to secure the protocol. If you have AAVE and want to learn how to stake, head over to our Migration and Staking 101 instructions.  

Staking for safety mining 

When AAVE holders stake their AAVE in the SM, 400 AAVE/day is distributed among all the stakers. The more AAVE you put into the SM, the more AAVE you receive. If in the future the governance decides to vote on it, stakers might also receive part of the Protocol fees.  

Why should I stake? 

Staking helps secure the Aave Protocol, ensuring that the funds in the protocol remain safe. As a reward for securing the protocol, AAVE holders receive Safety Incentives in the form of AAVE every day.  

What are the risks of staking? 

In the case of a shortfall event, up to 30% of the stake can be slashed to cover the deficit and protect the funds in the protocol. Stakers should take this risk into account!  

For now, however, slashing is not activated, so stakers can start staking risk free. An AIP is required for slashing to be activated.  

This opportunity has attracted AAVE token holders, with more unique addresses holding stkAAVE than AAVE since inception. Currently 19% of AAVE circulating tokens are staked, receiving an APY of 5.5%. Another 21% of AAVE circulating tokens are deposited on the Aave Protocol to be used as collateral. 

The Future of Staking

Coming soon, users will be able to stake AAVE or BPT (Balancer Pool Token) to secure the protocol. You'll be able to receive BPT by depositing a combo of AAVE + ETH in the Balancer liquidity pool. You will then be able to stake your BPT in the Safety Module to secure the protocol in case of an emergency and earn Safety Incentives in the form of AAVE, BAL, and a percentage of protocol fees. Similar to staking plain AAVE, up to 30% of your stake can be slashed in the case of a shortfall event. 

Staking overview 

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Cheers,

Aave Team