Aave and Sky form an alliance to supercharge the DeFi ecosystem

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Decentralized apps Aave and Sky have announced a joint effort to bring the decentralized finance (DeFi) ecosystem into the traditional financial realm.

Called Sky Aave Force, the effort consists of these decentralized applications that share seamless integrations with their products.

Aave introduced a proposal on August 28 to include the new Sky Dollar token (USDS) and Savings Sky Dollar (sUSDS), updated versions of the stablecoin protocol DAI and Savings DAI.

If approved, the proposal would offer all the features DAI and sDAI already have under Aave, including the ability to be used as collateral, lent and exchanged via Paraswap.

Meanwhile, Sky presented a proposal on September 2 explaining that the idle supply of sUSDS used as collateral on Aave will be eligible to earn the Sky Savings Rate (SSR), the return feature linked to USDS.

“This program will help Sky drive USDS adoption after launch, and the incentive program will increase TVL (Total Value Locked) and Aave revenue by attracting new borrowers,” Sky’s proposal said.

Moreover, users who opt to use sUSDS as collateral on Aave v3 will also be eligible for the pre-farming airdrop of SPK, the Spark token. Spark is the coin market linked to the Sky ecosystem.

The Aave team has agreed to place rewards on the sUSDS market and will update their UI to display SPK rewards.

Sky’s proposal also suggests the creation of a Direct Deposit Module (D3M) within Aave’s specific Lido instance. This would allow a smart contract to trade USDS tokens from Sky directly to a lending pool on Aave, something the proposal says would boost adoption of USDS and wstETH.

Movements focused on RWA

The Sky Aave push comes days after both Aave and Sky made moves to focus on real-world asset (RWA) integrations.

Sky is MakerDAO’s new brand, which has introduced two new versions of its tokens: SKY and USDS. While SKY is the updated version of the MKR governance token, USDS is the updated version of the DAI stablecoin.

The idea of ​​improved versions of MKR and DAI was first officially shared on May 15 blog post by MakerDAO co-founder Rune Christensen. The idea behind this is to make USDS more compatible with the jurisdictions it serves so that the stablecoin can be used in mainstream RWA applications.

Moreover, Aave introduced a proposal for a new GHO Stability Module (GSM), which consists of using the BUIDL shares of BlackRock’s tokenized fund to generate an additional return for its stablecoin holders.

After a user exchanges USD currency (USDC) for Aave’s GHO, the smart contract will be able to exchange the amount of USDC for BUIDL shares. Because the BlackRock fund generates daily returns, GHO holders will have an additional avenue for accumulating value.

Additionally, this integration could be a way to start more partnerships between Aave and BlackRock on the RWA front, according to the proposal.

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