Aave Adds sDAI to Collateral Assets

Aave, a leading lending platform, has officially included sDAI in its collateral asset list. Users can now deposit sDAI into Aave and borrow WETH at a corresponding rate.

Update Details:

• sDAI: This is a version of the DAI token with a 5% interest rate from the DAI Savings Rate (DSR).
• Support: sDAI will be supported as "Collateral-Only", meaning it can only be used as collateral and not for borrowing.
• Borrowing Assets: Only DAI and WETH are supported as borrowing assets when collateralized by sDAI.

Proposal and Recommendations:

• Aave-Chan Initiative & Chaos Labs: These entities are behind the proposal to support sDAI as collateral for minting GHO.
• MakerDAO's DSR Fund: Aave holds a portion of funds in DSR and is considering supporting sDAI to mint GHO.

GHO Minting Halted:

Aave announced a temporary halt on minting GHO stablecoin to reassess risks and adjust the interest rate from 1.5% to 2.5% to ensure stability.

RWA Proposal for USDC:

Another controversial proposal is the deployment of Real World Assets (RWA) for USDC in the project's Treasury. This proposal has been approved, and Aave will experiment by converting $1 million USDC in the Treasury into short-term bonds, gradually increasing the proportion to 20% of the current stablecoin holdings.

Divergent Opinions:

• Some believe that yields from Government Bonds, the specific Real World Assets in question, will soon diminish once the financial market returns to normal.
• Accepting the custodial risk and accumulating off-chain assets might not be proportionate.