AAVE’s Bull Run has gained momentum as holders voted on a governance proposal titled “Treasury Management – Acquire wstETH & rETH.” The proposal looks to convert 1,600 Ether (ETH) into equal amounts of wstETH and rETH which will be stored in the Ethereum Collector Contract. At press time, all 252,152 votes cast were in favor of the proposal.
AAVE token has had an impressive 26% gain in the last seven days and a daily high of $80.28. However, it had pulled back to $76.92 at the time of writing. So, why convert the ETH to wstETH and rETH?
Aave is the third-largest DeFi protocol with a total value locked of $6 billion. It currently holds 1,786.51 awETH and 104.548 ETH in the Collector Contract. The awETH deposit yield in Aave v2 earns 1.69%, compared to the 3.8% and 3.13% yields that Aave DAO would earn if it held wstETH and rETH respectively. If passed, all unproductive ETH balance, along with aWETH (v2 and v3) will be converted into the same amounts of wstETH and rETH for higher staking yields.
Wrapped staked ether (wstETH) and rocket pool ether (rETH) are liquid staking derivatives. This will allow Aave to stake the tokens for a yield whilst still retaining liquidity.
