Overview
Aura is a protocol designed to augment the rewards for liquidity providers and BAL stakers within the Balancer ecosystem. It does so by pooling BAL deposits and leveraging its native token, AURA, to provide additional incentives.
For BAL stakers, Aura simplifies the transition to vote-escrowed BAL (veBAL) by introducing auraBAL, a tokenised representation of an 80/20 Balancer Pool Token (BPT) that is locked in the Voting Escrow system for the maximum duration. Staking auraBAL enables users to collect standard Balancer rewards (like BAL and USDC), a portion of the BAL earned by Aura and extra AURA tokens. Although converting BAL to auraBAL is a one-way process, users have the option to exchange auraBAL for BAL through a dedicated liquidity pool.
Aura also simplifies the process for liquidity providers by offering a streamlined way to deposit into Balancer's gauge system. This allows depositors to benefit from a significant boost provided by the protocol's veBAL, in addition to earning AURA rewards.
The AURA token is key for governance within the Aura ecosystem. Holders of locked AURA tokens are granted governance rights, allowing them to vote on both external proposals affecting the broader Balancer ecosystem and internal proposals specific to Aura.
Monthly Revenue Overview
Overall Aura’s total revenue sits at $9,885,815. Its total BAL revenue comes in at $8,954,873.
The most recent development that stands to change the dynamics of Aura going forward lies within the latest improvement proposal as discussed below.
Aura Improvement Porposal 63 (AIP-63) Tokenomics Optimisation & AIP-42 Renewal
The proposal seeks to adjust the Aura Protocol's token emission strategy, extending AIP-42's principles for an additional six months, with a focus on optimising tokenomics to reduce total emissions without affecting the protocol's core functions. The aim is to decrease the emission rate by 12%, with plans for further reductions every six months, transitioning towards a sustainable model over the coming years. This strategy is designed to relieve the inflationary pressure from new tokens and maintain the protocol's value.
Key aspects include maintaining the current benefits for liquidity providers and voted locked Aura (vlAURA) holders by carefully balancing the need for emission to sustain the protocol's health with long-term sustainability. The proposal revisits the emission strategy set forth by AIP-42, which aligns emissions more closely with Aura stakeholders' interests and suggests adjustments in light of current data and future projections.
Specifically, the proposal outlines a decrease in token emissions across the board with certain priorities, such as enhancing AURA/ETH liquidity and adjusting auraBAL LP incentives to safeguard the peg's stability. Proposed changes include redirecting vlAURA fees to AURA/ETH liquidity, adjusting the distribution of AURA to different functions and eliminating a 2% fee to benefit LPs and reduce overall token minting.
This approach is rooted in current data analysis, considering factors like revenue sources, value flows and APRs, which indicate the protocol's reliance on BAL farming and the substantial share of veBAL votes controlled by Aura. By implementing these adjustments, the proposal aims to ensure the protocol's resilience, competitive LP capacity and attractive yields for stakeholders, all while moving towards a more balanced and sustainable emission rate.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.