The Launch of Aave’s Merit Reward Program
In a strategic move to gain an edge over its competitors, Aave (AAVE) has introduced a new reward program called “Merit.” This program is specifically designed for Aave’s most loyal users and aims to reward genuine contributions to the Decentralized Autonomous Organization (DAO). Unlike generic incentives, Merit focuses on actions that benefit the DAO.
Aave Penalizes Engagement With Non-Aligned Products Through Merit Airdrop
Merit recently went live and started distributing 280 Wrapped Ethereum (WETH) to select borrowers. Additionally, there are plans for an airdrop targeting Aave’s stablecoin, GHO, borrowers and stakers in the near future. The success of Merit can already be seen with around 200,000 Ethereum (ETH) being moved from other protocols to Aave. The program follows a booster model, providing weekly WETH and GHO airdrops.
One notable feature of Merit is its additive operation, which ensures that users maintain their existing rates and parameters within the Aave ecosystem. It incorporates boosters and diluters to fine-tune rewards according to Aave’s objectives. Actions that align with Aave’s strategy receive enhanced rewards, while non-supportive behaviors face reductions. However, despite the airdrop announcement, there has been no significant impact on the price of AAVE.
The specifics of the reward system remain confidential to prevent manipulation. However, Merit rewards specific activities such as depositing liquid staked tokens, borrowing wETH, and holding stGHO. On the other hand, engagement with non-aligned protocols leads to a significant dilution of rewards. Currently, Morpho Aave Optimizers v2 and v3 are considered non-aligned and face up to a -100% dilution.
A clash has emerged between Marc Zeller of Aave DAO and Paul Frambot of Morpho Labs regarding the alignment of Morpho with Aave. Zeller has criticized Morpho, calling it a revenue-draining leech on Aave, while Frambot highlights Morpho’s liquidity and revenue contributions to the Aave DAO.
“Aave is attempting to prevent the growth of Morpho by introducing Merit, a rewards program,” Frambot said.
This clash highlights the broader trend of using airdrops in the crypto sector to increase community involvement. Saga network recently announced its game publishing division and hinted at a mainnet launch. Eligible wallets will be able to claim Saga network airdrops after the mainnet launch. Similarly, AEVO’s airdrop of 30 million tokens saw a high claim rate but did not significantly affect transaction trends. The experience with Starknet was also similar, with a noticeable user dip preceding its airdrop. These cases demonstrate the diverse outcomes of airdrop strategies in the crypto ecosystem.
Hot Take: The Impact of Aave’s Merit Reward Program
The introduction of Aave’s Merit reward program is a strategic move aimed at rewarding loyal users and encouraging genuine contributions to the DAO. By aligning rewards with Aave’s objectives and penalizing engagement with non-aligned products, Aave aims to strengthen its position in the crypto ecosystem.
However, it remains to be seen how effective Merit will be in achieving its goals. The success of the program can be measured by the number of users migrating from other protocols to Aave and the overall impact on AAVE’s price. Additionally, the clash between Aave DAO and Morpho Labs highlights the challenges of aligning different projects within the crypto space.
Overall, Aave’s Merit reward program is an innovative approach to incentivizing user engagement and loyalty. It will be interesting to observe how the program evolves and whether it becomes a model for other projects in the future.
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