Aave and Sky Announce New Partnership to Enhance DeFi Integration
In a move aimed at bridging the gap between decentralized finance (DeFi) and traditional finance (TradFi), Aave and Sky (formerly Maker) have unveiled a significant partnership named the Sky Aave Force. This initiative, announced on September 2, seeks to integrate Sky’s stablecoin and related assets into Aave’s platform, potentially transforming both DeFi and TradFi ecosystems.
The partnership will focus on incorporating Sky’s new tokens, USDS and sUSDS, into Aave’s infrastructure. The USDS token is a rebranded version of the previously known DAI, while sUSDS represents the yield-bearing counterpart. The proposal, introduced by Phoenix Labs, aims to distribute up to 3.33 million SPK tokens per month to incentivise the establishment of a market for sUSDS on Aave’s v3 platform.
Aave Labs highlighted the significance of this collaboration: “Sky Aave Force has an ambitious goal: to drive mass adoption and close the gap between DeFi and TradFi. Now is the time to work together.”
Impact on Aave’s Ecosystem
The proposed integration includes several key elements. First, idle sUSDS used as collateral on Aave will earn yield through the Sky Savings Rate (SSR), enhancing returns compared to traditional stablecoin counterparts like USDC and USDT. Additionally, a new USDS Direct Deposit Module (D3M) will allow Sky to mint USDS directly into Aave’s market, circumventing standard collateral requirements.
“This program will help Sky to boost adoption of USDS after launch, and the incentives program will boost Aave’s TVL [total value locked] and revenue by attracting new borrowers,” noted a representative from Sky.
Enhancing DeFi and Real-World Assets
This partnership follows recent moves by both Aave and Sky to integrate real-world assets (RWA) into their platforms. Sky, rebranded from MakerDAO, introduced new tokens SKY and USDS to comply with regulatory standards and support RWA applications. Concurrently, Aave proposed a new GHO Stability Module (GSM) to enhance yield for its stablecoin holders by leveraging BlackRock’s tokenized fund.
Sky’s integration of USDS and sUSDS into Aave is expected to increase the total value locked (TVL) on the Aave platform and attract new users. The partnership is also poised to stimulate further collaborations in the RWA sector, potentially expanding the reach and functionality of both platforms.
Conclusion
The Sky Aave Force partnership marks a pivotal moment in the evolution of DeFi and its intersection with traditional finance. By integrating Sky’s upgraded tokens into Aave’s platform and implementing innovative incentive structures, both platforms aim to enhance user engagement and drive broader adoption. This strategic alliance not only underscores the growing convergence between DeFi and TradFi but also sets the stage for future developments in the financial technology landscape.
