Aave DAO decides to swap to $2 million in Balancer LP tokens

The Aave community approved a $2 million token swap to procure BAL-WETH liquidity pool tokens from the decentralized exchange protocol Balancer as part of its diversification strategy.

The Aave DAO will conduct the swap, using 310,000 BAL valued at $1.4 million and 326 units of wrapped ether worth $600,000 from its treasury.

The approved assets will be converted into B-80BAL-20WETH, pairing BAL tokens with ether. The swap will be conducted with the help of CowSwap’s Milkman protocol, which will guard against miner extractable value exploits and minimize potential slippage risks.

The Aave DAO plans to convert its BAL-WETH holdings into vote escrowed Balancer tokens (veBAL), the main staking and governance token on the Balancer platform. The objective of the actions is to enhance Aave’s position in the DeFi market by attracting more liquidity to Aave’s Balancer pools, potentially leading to increased revenues from enhanced yields.

Balancer liquidity pool

Cryptocurrency users and projects can obtain veBAL tokens and corresponding governance voting rights by acquiring Balancer liquidity pool tokens from the BAL/ETH pool on Balancer. The voting rights allow holders to influence decisions like the distribution of liquidity mining rewards to various pools, encouraging more activity and leading many DeFi projects to accumulate tokens from major protocols like Curve and Balancer.

The moves coincide with Aave’s strategic decision to diversify its sizable $124 million treasury through the integration of a range of cryptocurrency assets. Most recently, the Aave DAO members have unanimously approved the conversion of 1,600 ETH from its treasury reserves into staked ether (stETH) and rocket ether (rETH) — an action that can generate additional revenue for the DAO.

Sourced from cryptonews.net.

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