rewrite this title Aave’s New Proposal Suggests Scaling With Bitcoin As Strategy For Treasury Growth

by
Alisa Davidson

Published: January 17, 2025 at 5:33 am Updated: January 17, 2025 at 5:33 am

by Ana

Edited and fact-checked:
January 17, 2025 at 5:33 am

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Decentralized finance (DeFi) lending platform Aave has released a temperature check proposal suggesting an initiative to advance Aave by securing a new revenue stream, expanding its Bitcoin treasury, and ultimately enhancing the stability of the Aave stablecoin, GHO.

The proposal outlines a strategy to tap into Bitcoin mining as a new revenue source for the Aave ecosystem. This approach could not only strengthen the protocol’s financial standing but also offer potential capital gains tax depreciation opportunities. By adopting this strategy, Aave positions itself as a leading player in the DeFi space, with the possibility of attracting institutional interest.

Additionally, the proposal seeks to elevate the Aave stablecoin by directly integrating it with the Bitcoin network. This would involve using Aave funds to purchase turnkey mining hardware, an innovative approach to capturing market attention and attracting new users. This strategy aims to enhance both the scalability and reach of the Aave stablecoin while adding Bitcoin to Aave’s balance sheet.

Bitcoin Mining For Aave Treasury 

The core concept is straightforward yet impactful: leverage a portion of the Aave treasury to mine Bitcoin without large operational complexity. By avoiding the need for construction, development, or long waiting periods, this approach allows miners to come online quickly and begin generating cash flow. With the latest S21XP air-cooled unit, Aave could expect an attractive 33.03% net annualized return.

Aave is exploring a strategic partnership with Blockware Solutions, a well-established Mining-as-a-Service provider operating since 2017. Blockware has a proven track record, managing operations across five states, hosting over 400 MW of hardware, and selling more than 350,000 ASICs. Their expertise in making Bitcoin mining scalable and cost-effective positions them as a reliable partner. The aim of the collaboration is to offer Bitcoin miners and retail customers the option to pay for mining equipment with Aave, a stablecoin with on-chain functionality, without any obligations, making the entry into the market smoother and more trusted.

Through this partnership, Aave would mine Bitcoin at scale by leveraging Blockware’s existing infrastructure, which includes access to favorable electricity rates and discounted hardware prices. In addition to mining, Aave would have the opportunity to participate in the resale market of mining hardware, offering turnkey rigs to retail customers. These rigs typically come with a 20-30% premium, providing Aave with an arbitrage opportunity to benefit from both mining rewards and the hardware’s appreciation in value.

Overall, this strategy positions Aave at the intersection of two key trends: the growth of Bitcoin mining and the rise of stablecoins. By partnering with Blockware Solutions, Aave can unlock a unique opportunity to mine Bitcoin at scale, gain from mining rewards and hardware appreciation, and organically expand its Bitcoin holdings. This move represents a timely and strategic approach to a market full of potential.

Aave functions as a decentralized, non-custodial liquidity market protocol that allows users to participate as liquidity suppliers or borrowers. As liquidity suppliers, users contribute funds to the protocol, earning passive income through interest accumulation. Alternatively, users can become borrowers, obtaining funds through mechanisms like perpetual borrowing or one-block liquidity. This flexible structure offers participants a versatile and decentralized approach to engaging with the protocol.

About The Author

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

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Alisa Davidson

Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.

More articles