Ave, Sky Floating Partnership to DeFi, TradFi Bridge
Decentralized finance (DeFi) protocols Aave and Sky (formerly Maker) are looking for a partnership designed to “close the gap between DeFi and TradFi,” according to a September 2 announcement.
The proposed partnership, called Sky Ave Force, follows a regulatory proposal filed Sept. 2 by Phoenix Labs, a DeFi research and development firm. The proposal suggests that Sky's subDAO parent Spark issue SPK tokens to help establish a market for USDS, a stablecoin launched after Seri's August conversion to Sky.
“Sky Aave Force has a big goal: to drive mass adoption and close the gap between DeFi and TradFi. Aave Labs, the developer behind the Aave DeFi lending platform, says it's time to work together.
Sky Aave Force aims to bridge Defin, Tredfin. Source: Aave Labs
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Phoenix Labs proposes to distribute up to 3.33 million SPK tokens per month to encourage the Aave v3 market for Sky sUSDS, a product token representing deposits of the Sky Savings Rate (SSR) program. Similar to the previous DAI Savings Rate (DSR) program, SSR is provided to depositors from revenues generated by the Sky Protocol.
As planned, idle sUSDS on Aave will “consistently earn a Sky Savings Rate (SSR), allowing the market to outperform its USDC/USDT counterparts,” Phoenix Labs said.
The proposal also suggests the introduction of the USDS Direct Deposit Module (D3M) into Aave's Lido Market, with an initial debt ceiling of $100 million. In July, Ave partnered with Lido, the leading Ethereum staking protocol, to create a liquid staking derivative (LSD) for wstETH that represents a claim on the Lido ETH staking pool.
D3M allows Sky USDS to enter the Aave market directly without having to meet formal collateral requirements.
“Aave is the largest credit market in DFi with over 11B per TVL across multiple chains. This shows many synergies between the two protocols. USDS is the largest decentralized stablecoin,” said Phoenix.
“We see this as the first step in developing a deeper relationship with Aave to promote both protocols as a scalable DeFi core,” Phoenix added.
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