Aave tokenholders enter Bitcoin mining.
According to the proposed decentralized finance (DeFi) protocol management platform, the Aave tokenholder community is mining Bitcoin (BTC) to increase revenue and accelerate the adoption of Aave's stablecoin.
The Jan. 15 proposal, which is still awaiting a token owner vote, was written by Blockware Solutions, a Bitcoin mining service provider.
According to the proposal, Ave will register blockchain to operate on behalf of Bitcoin mining equipment, seeking to generate a “robust 33.03% net annual return” for Aave's treasury.
Bitcoin mining not only strengthens the protocol's balance, but also opens the door to tax-minimizing strategies, Blockware said.
The DeFi protocol integrates the GHO stablecoin “directly into the Bitcoin network.” This will “introduce Bitcoin miners and retail customers to be able to pay with Miners AAVE (GHO),” the proposal states.
Comments on Aave's governance forum reveal skepticism among token holders, including concerns about the profitability and costs of bitcoin mining.
Aave is a DeFi lending protocol that allows users to borrow cryptocurrency by putting up other crypto assets as collateral.
Aave Proposal for Bitcoin Mining. Source: Ave
Related: Aave, Sky float partnership to DeFi, TradFi bridge
Slow stablecoin adoption
In July, Ave launched the GHO stablecoin on the Arbitrum network, an Ethereum layer-2 scaling blockchain.
It has joined several other DeFi protocols, including Sky (the former developer) and Curve Finance, in developing a proprietary US dollar-denominated token.
So far, GHO adoption has been muted. As of January 16, the market capitalization was about $166 million.
This USDT (USDT) stable coin market capitalization is about 1,000 times smaller than the market leader Tether, which is around $140 billion.
Development in Bitcoin mining
BTC's strong performance is partially offset by headwinds from April's halving, which has boosted yields for bitcoin miners, reducing mining rewards from 6.25 BTC to 3.125 BTC per block.
Miners prioritized storing BTC on the ledger. In December, JPMorgan raised price targets for four Bitcoin mining stocks to reflect the value of miners' BTC holdings, the bank said.
Integrating GHO into the Bitcoin network will establish it as a “Bitcoin-powered stablecoin with real-world value,” Blockware said.
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