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How Aave Plans to Reward Loyalty and Outpace Rivals Through Merit Airdrop

2 mins
Updated by Harsh Notariya
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In Brief

  • Aave's "Merit" program rewards loyal users, focusing on DAO contributions, with 280 WETH already distributed
  • The program enhances rewards for Aave-aligned activities while penalizing non-supportive behavior, impacting competitors.
  • Despite the airdrop's launch, AAVE's price remained stable; Merit's full reward criteria are undisclosed to prevent farming.
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In a strategic move to outmaneuver its rivals, Aave (AAVE) has launched “Merit,” a new reward program, on Tuesday at 18:00 UTC. This program is aimed at Aave’s most loyal users.

Merit rewards actions beneficial to the Decentralized Autonomous Organization (DAO). This initiative focuses on genuine contributions rather than generic incentives.

Aave Penalizes Engagement With Non-Aligned Products Through Merit Airdrop

Merit went live, distributing 280 Wrapped Ethereum (WETH) to select borrowers. Furthermore, an airdrop for Aave’s stablecoin – GHO borrowers and stakers is on the horizon.

The success of Merit is evident, with around 200,000 Ethereum (ETH) moving from other protocols to Aave. The program, based on a booster model, rewards weekly WETH and GHO airdrops.

Remarkably, Merit operates additively, ensuring users maintain existing rates and parameters within the Aave ecosystem. It integrates boosters and diluters, fine-tuning rewards to align with Aave’s objectives.

Therefore, actions that further Aave’s strategy receive enhanced rewards, while non-supportive behaviors face reductions. Nonetheless, despite the airdrop announcement, there has been no significant impact on the price of AAVE.

Read more: Aave (AAVE) Price Prediction 2024/2025/2030

Aave Price Performance
Aave Price Performance. Source: BeInCrypto

The reward system’s intricacies remain confidential to prevent manipulation. However, Merit rewards specific activities like depositing liquid staked tokens, borrowing wETH, and holding stGHO. On the flip side, engagement with non-aligned protocols leads to significant reward dilution.

Currently, Morpho Aave Optimizers v2 and v3 are deemed non-aligned, facing up to a -100% dilution. Marc Zeller of Aave DAO criticized Morpho, labeling it a revenue-draining leech on Aave. Conversely, Paul Frambot of Morpho Labs contested this, highlighting Morpho’s liquidity and revenue contributions to the Aave DAO.

“Aave is attempting to prevent the growth of Morpho by introducing Merit, a rewards program,” Frambot said.

This clash highlights the broader trend of airdrops in the crypto sector, used to boost community involvement.

At a recent game developer conference, Saga network unveiled a new game publishing division, hinting at a mainnet launch. After the mainnet launch, certain eligible wallets can claim Saga network airdrop.

Read more: Best Upcoming Airdrops in 2024

Contrastingly, AEVO’s airdrop of 30 million tokens saw a high claim rate but didn’t significantly affect transaction trends. Starknet’s experience was the same, with a noticeable user dip preceding its airdrop. These cases reflect the diverse outcomes of airdrop strategies in the crypto ecosystem.

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Harsh Notariya
Harsh Notariya is a journalist at BeInCrypto, who writes about various topics, including decentralized physical infrastructure networks (DePIN), tokenization, crypto airdrops, decentralized finance (DeFi), meme coins, and altcoins. Before joining BeInCrypto, he was a community consultant at Totality Corp, specializing in the metaverse and non-fungible tokens (NFTs). Additionally, Harsh was a blockchain content writer and researcher at Financial Funda, where he created educational reports on...
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