Aave, a decentralised non-custodial lending and borrowing protocol, is currently undergoing a governance vote to incorporate PayPal’s PYUSD stablecoin, issued by Paxos Trust Company. In a temperature check proposal initiated by Trident Digital on Dec. 18, 99.98% of participating AAVE token holders express support for integrating PYUSD into AAVE’s Ethereum-based pool. The voting concludes later Thursday. This decision aligns with decentralised exchange Curve’s recent move to host PYUSD.
PYUSD, established in August, has garnered a $289 million market capitalization, representing 0.3% of tether’s leading $94 billion market cap. Aave stands as the world’s third-largest decentralised finance (DeFi) solution, with almost $5 billion in crypto assets locked in the protocol, according to DappRadar.
Trident’s proposal emphasises that integrating PYUSD into AAVE will foster synergies with PayPal’s stablecoin and strengthen the connection between PYUSD and AAVE’s decentralised multi-collateral stablecoin, GHO. Trident, incentivizing the PYUSD/USDC liquidity pool on Curve, pledges to contribute $5 million to $10 million in liquidity for PYUSD on AAVE from day one.
Trident aims to maintain high yields on Curve, generating organic borrowing demand for PYUSD on AAVE. While direct incentives on AAVE are not planned, Trident believes their overall incentive strategy will drive borrowing demand from day one, as stated in the governance proposal chat: “The idea is to keep yields quite high on Curve. This will create organic borrowing demand for PYUSD on AAVE. So while we don’t intend to provide direct incentives on AAVE we believe our overall incentive strategy will allow for borrowing demand on day 1,” Trident said.