Introduction

Safety Incentives are rewards distributed to participants who stake their assets in the Aave Safety Module (both Umbrella and legacy). These incentives serve as compensation for the risk taken by stakers, whose assets may be slashed to cover protocol deficits in the event of a shortfall.

Umbrella Rewards System

The Umbrella system features a dynamic rewards mechanism that automatically adjusts emission rates based on total staked amounts relative to target liquidity levels. When staking falls below governance-defined targets, rewards increase to attract more participants. When staking exceeds targets, rates decrease proportionally. This mathematical model ensures sustainable reward distribution while optimizing for ideal coverage levels. Each staked asset can simultaneously earn up to eight different reward token types, with governance controlling target liquidity levels, maximum emission rates, reward token selection, and distribution periods. The system provides predictable treasury management by capping maximum expenses at target liquidity levels, creating more efficient budget allocation compared to static reward systems.

Legacy Safety Module Rewards

For the legacy Safety Module (stkAAVE, stkABPT, stkGHO), rewards are primarily distributed in the form of AAVE tokens. The emission parameters are determined by Aave Governance.

The emission parameters are allocated from the Ecosystem Reserve (AAVE Tokens) and/or the Protocol Treasury. Governance votes allow AAVE token holders to influence how much of the reserve or treasury is allocated to these incentives and how they are distributed over time.

Claiming Rewards

Safety Incentives can be claimed at any point while tokens are staked or after unstaking from the safety module. Claiming can be performed through protocol smart contracts or through a frontend such as Aave Labs interface, by performing the following steps:

Step 1: Connect Wallet

To start, press 'Connect Wallet' and choose the Ethereum wallet provider associated with your staked tokens.

Step 2: Navigate to the 'Stake' Tab

Once connected, go to the 'Stake' tab within the Aave interface, where you can monitor your staked assets and the accumulated Safety Incentives.

Step 3: Claim Rewards

Within the 'Stake' tab, you will see the option to claim your accumulated rewards. Click on the 'Claim' button, which will prompt a transaction in your connected wallet. Confirm the transaction to claim Safety Incentives.

GHO Discount

Holders of stkAAVE can receive a discount on GHO borrowing rates:

• 100 GHO borrowing discount per stkAAVE
• Automatically applied when borrowing GHO
• Can be modified by Aave Governance if needed