We’ve just published a new proposal on the Aave governance forum to bootstrap the stS <> wS loop through a cashback incentive, fully funded by Aave’s own collector revenue.
Here’s everything you need to know 🧵
What’s the goal?
▪️Incentivize loop participation
▪️Deepen stS liquidity and unlock TVL growth
▪️Align economic incentives between Aave and Beets
▪️Ensure Aave remains the exclusive lending market for stS
It aligns with Beets’ commitment to Aave and the “Just Use Aave” vision, with no external lending incentives and no fragmentation.
Incentive Program – stS Loop
It is entirely funded by the stS revenue generated by the Aave Collector.
► Phase 1 (3 months):
▪️ 100% of Aave Collector revenue from stS will be recycled to loopers
▪️ Budget: 40,000 wS via MASiv SAFE for the first month
► Phase 2 (next 3 months):
▪️ 50% of Aave Collector revenue from stS will be recycled to loopers
This initiative requires no external funding and introduces no new emissions. It simply recycles existing protocol revenue efficiently.
Borrow Rate Optimization – wS (Sonic)
To support the stS loop strategy, @Chaos_labs updated the wS interest rate model.
The goal: unlock more borrowable capacity and align with the current stS staking yield.
▪️ UOptimal: 45% → 80%
▪️ Slope1: 7% → 4%
▪️ Slope2: 300% → 80%
▪️ Borrow Cap: 50M → 100M
These optimizations enable more capital-efficient stS <> wS loop strategies.
Here comes the intern with the math spreadsheet.
When fully leveraged at 7.92x (HF 1.03) you'll get:
▪️ 4.13% from stS yield
▪️ 0.78% from the loop incentives program
▪️ and you'll pay about 4.08% Borrow APY at Uoptimal
📈 Final result: 10.65% APY! Juicy
🗳️ Next steps:
The proposal is currently being discussed on the forum at the ARFC stage.
If there is broad alignment, it will move to a Snapshot vote and then to an on-chain AIP for implementation.
🔗 Proposal:
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