Aave and Sky Join Forces to Bring DeFi to TradFi

Decentralized applications Aave and Sky have announced a joint effort to take the decentralized finance (DeFi) ecosystem to the traditional finance realm.

DeFi protocols Aave and Sky are joining forces to integrate their protocols and bring DeFi to TradFi.

Together, they are launching an initiative called "Sky Aave Force."

As part of the effort, Aave will integrate Sky Dollar (USDS) and Savings Sky Dollar (sUSDS) into its protocol.

If approved, Aave users will be able to use USDS and sUSDS as collateral, borrow against them, and swap them through Paraswap.

On the other hand, Sky will introduce a proposal to make the idle supply of sUSDS available for earning Sky Savings Rate (SSR).

According to Sky's proposal, "This program will help Sky to boost adoption of USDS after launch, and the incentives program will boost Aave's TVL and revenue by attracting new borrowers."

Furthermore, users who use sUSDS as collateral on Aave v3 will be eligible for the pre-farming airdrop of Spark's token, SPK.

The Aave team has agreed to allocate rewards to the sUSDS market and will update its UI to display the SPK rewards.

Sky's proposal also includes the creation of a Direct Deposit Module (D3M) within Aave's Lido-specific instance.

This module will allow a smart contract to transfer USDS tokens from Sky to a lending pool on Aave, which the proposal claims will increase the adoption of USDS and wstETH.

Both Aave and Sky recently made separate moves to integrate RWAs into their protocols.