Happy Wednesday fellow DeFi degens!
I was expecting to spend a large portion of this edition of Finance Redefined analyzing Aave’s liquidity mining program. There was some anxiety from investors that the emission of 2,200 $AAVE per day (which would translate to roughly 5% of the ecosystem reserve fund of 2.8 million AAVE per year) might end up dragging down the token’s price as farmers earn and dump.
I would feel very uncomfortable holding an asset if the governance token of a very important protocol ends up in the hands of people who only think about short term gains.
— Grogu (@eip1559) April 26, 2021
Turns out, it’s unnecessary: the program’s an unmitigated success. The AAVE token is up nearly 15% since the launch of liquidity mining to $462, and the protocol’s total value locked figure has surged to $11.8 billion — up from just over $7 billion since liquidity mining began.
Well-researched liquidity mining works. Only question now is, if the program is discontinued, how much of that TVL will be sticky?
Other narratives to keep an eye on:
Money legos keep stacking
At the start of the year there was speculation that in 2021 DeFi would see something of a novelty: one protocol acquiring another, likely via a governance token buyout. The Synthetix 2021 roadmap in particular opened the door to such a possibility, comparing it to acquisitions in TradFi and looking to Yearn’s merger/acquisition/collaboration spree for inspiration.
Large-scale mergers and acquisitions have yet to play out, however. There are some smaller examples brewing — Inverse Finance is currently looking to buy out Tonic for some $1.6 million, for instance — but instead what we’re seeing is a boom in deep integrations at the protocol and frontend layers.
On Monday, Badger DAO and RenVM launched the Badger Bridge, a new interface for depositing native BTC into Badger vaults with just a few clicks. The integration stands…