Key takeaways
- Aave and Sky Partner to Integrate New USDS and sUSDS Tokens into the Aave Platform.
- The collaboration aims to drive USDS adoption and increase Aave’s total value locked.
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Decentralized applications Aave and Sky have announcement a joint effort to bring the decentralized finance (DeFi) ecosystem into the realm of traditional finance.
Dubbed Sky Aave Force, the effort consists of decentralized applications sharing seamless integrations with their products.
Aave introduced a proposal on August 28 to include Sky’s new token, Sky Dollar (USDS), and Savings Sky Dollar (sUSDS), the protocol’s upgraded versions of its stablecoins DAI and Savings DAI.
If approved, the proposal would provide all the functionality that DAI and sDAI already have in Aave, including the ability to be used as collateral, borrowed, and traded via Paraswap.
Meanwhile, Sky submitted a proposal on September 2 explaining that the inactive supply of sUSDS used as collateral on Aave will be eligible to earn the Sky Savings Rate (SSR), the yield feature tied to USDS.
“This program will help Sky drive USDS adoption post-launch, and the incentive program will increase Aave’s TVL (total value locked) and revenue by attracting new borrowers,” Sky’s proposal reads.
Additionally, users who choose to use sUSDS as collateral on Aave v3 will also be eligible for the pre-farming airdrop of SPK, Spark’s token. Spark is the money market tied to the Sky ecosystem.
The Aave team has agreed to place rewards on the sUSDS market and will update its UI to display SPK rewards.
Sky’s proposal also suggests creating a Direct Deposit Module (D3M) within Aave’s Lido-specific instance. This would allow a smart contract to transfer USDS tokens from Sky directly to a lending pool on Aave, which the proposal says would boost adoption of USDS and wstETH.
RWA-focused movements
The Sky Aave Force comes days after Aave and Sky both took steps toward integrating real-world assets (RWAs).
Sky is the new brand of MakerDAO, which has introduced two new versions of its tokens: SKY and USDS. While SKY is the upgraded version of the MKR governance token, USDS is the upgraded version of the DAI stablecoin.
The idea of improved versions of MKR and DAI was first officially shared on May 15 blog post by Rune Christensen, co-founder of MakerDAO. The idea behind this is to make USDS more compliant with the jurisdictions in which it is offered, so that the stablecoin can be used in mainstream RWA applications.
Additionally, Aave introduced a proposal for a new GHO Stability Module (GSM), which involves using shares of BlackRock’s BUIDL tokenized fund to earn additional yield for its stablecoin holders.
After a user exchanges USD Coin (USDC) for Aave GHO, the smart contract will be able to exchange the USDC amount for BUIDL shares. Since BlackRock’s fund generates a daily yield, GHO holders will have an additional way to increase their value.
Additionally, this integration could be a way to launch more partnerships between Aave and BlackRock on the RWA front, according to the proposal.
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