Aave tries a new round of airdrops targeting competitors

A total of $5 million will be doled out over a 90-day period — and possibly longer


Satheesh Sankaran/Shutterstock modified by Blockworks


Merit, Aave’s latest alignment reward program, has gone live today and will be airdropping 280 wETH to wETH borrowers. 

GHO borrowers and stakers can also be expected to earn rewards from an airdrop next week. 

According to a press release reviewed by Blockworks, $2.1 million in wETH and $2.9 million in GHO will be spent over an initial 90-day period, and an extension proposal will be presented to the Aave DAO in April. 

Merit is designed to reward actions that benefit the Aave DAO, a twist in the competitive landscape of the DeFi space. Specifically, it uses a booster-based reward system that enables users to earn points over time. 

Read more: DeFi ‘points’ farming has reshaped the crypto investment landscape

The system’s calculations are kept private to prevent individuals from gaming it. However, some general actions that would be rewarded include depositing liquid staked tokens, borrowing wETH and GHO, or holding stGHO (staked GHO), for example. 

Actions like using “non-aligned” protocols will be penalized, resulting in “severe dilution” of up to -100%. There is currently only one protocol with non-aligned status: Morpho Aave Optimizers v2 and v3.

Marc Zeller, the founder of ACI, wrote in a forum post that this decision was made because “Morpho optimizers are a leech on top of the Aave protocol that provides zero benefits and steals potential revenue at the scale of millions per year for negligible yield improvement of users, subsidized by the fact they take zero revenue for doing this.”

But Paul Frambot, the co-founder and CEO of Morpho Labs, called that claim “not true,” citing liquidity and revenue to the Aave DAO as benefits of Morpho’s integration.

Read more: Wormhole’s W airdrop to ‘acknowledge and reward’ dedicated users

“The Aave DAO would very likely lose earnings without the efficiency improvements of Optimizer and MORPHO tokens that attract Morpho users and end up benefitting Aave. The math/data behind the value accrual of Optimizer is clearly non-trivial,” Frambot wrote.

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The launch of Merit also comes soon after one of Aave’s risk stewards, Gauntlet, left the protocol to become a Risk Curator at Morpho Labs.

Aave remains one of the most popular lending protocols in the DeFi space with a total volume locked (TVL) of $10.29 billion at the time of writing. Morpho, which launched in August last year, has a TVL of $1.78 billion.

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