AAVE hikes as holders vote on converting 1,600ETH into rETH and wstETH
- Aave holders are voting on a governance proposal to convert 1,600 ether (ETH) to wstETH and rETH.
- Aave currently earns a yield of 1.69% from the ETH that it has staked on the Aave v2 platform.
- At press time all the 252,152 votes cast were in favor of the proposal.
AAVE’s Bull Run has gained momentum as AAVE holders vote on a governance proposal titled “Treasury Managemet – Acquire wstETH & rETH.” The proposal seeks to convert 1,600 ETH to equal amounts of wstETH and rETH to be held in the Ethereum Collector Contract.
AAVE token has gained in excess of 26% in the last seven days and today’s surge confirms a long-term bullish trend. The token has hit a daily high of $80.28 today although it had pulled back to $76.92 at the time of writing.
Why convert the ETH to wstETH and rETH?
The majority of the Aave DAO seems to be in agreement seeing that all the voters had voted in support of the proposal at press time. 252,152 votes have been cast so far out of the 320,000 votes required for the proposal to be actioned. But what is the catch?
Aave is currently the third-largest DeFi protocol and has a total value locked of $6 billion. The Aave DAO currently holds 1,786.51 awETH and 104.548 ETH in the Collector Contract. The awETH deposit yield in Aave v2 earns 1.69%, compared to the 3.8% and 3.13% that Aave DAO would earn if it held wstETH and rETH respectively.
If passed all the unproductive ETH balance, along with aWETH (v2 and v3) will be converted into the same amounts of wstETH and rETH for higher staking yields.
Besides the higher yields, the wrapped staked ether (wstETH) and rocket pool ether (rETH), which are liquid staking derivatives, will allow Aave to stake the tokens for a yield whilst still retaining liquidity.
