Aave, a prominent decentralized finance (DeFi) protocol, is currently experiencing an active governance vote among its token holders. The AAVE token holders are considering a proposal to convert 1,600 Ether (ETH), valued at approximately $3 million, from the protocol's treasury into higher yield formats, specifically wrapped staked Ether (wstETH) and Rocket Pool Ether (rETH).

These two forms of Ether, wstETH and rETH, are liquid staking derivatives. They offer the unique advantage of allowing investors to stake tokens to generate yield while maintaining liquidity. Aave, currently the third-largest DeFi protocol with a total value locked of $6 billion, has been securing a yield of 1.69% from the 1,600 Ether by staking it on its Aave v2 platform.

The new proposal suggests that a more profitable yield could be obtained by staking the Ether as wstETH or rETH. As one token holder put forth in the proposal, the protocol would generate 3.8% by staking as wstETH and 3.13% by staking as rETH.

As of now, the proposal has received 252,000 votes out of the required 320,000 for it to be approved and implemented. The vote is scheduled to close on July 7th. It's worth noting that the proposal has not met any resistance as of press time, with all votes cast in favor. Most of these affirmative votes have been given by a wallet, known as "aavechan.eth."

The ongoing governance vote in the Aave community highlights the dynamic nature of DeFi protocol management. The proposal, if passed, could potentially yield more returns on the protocol's Ether assets, offering a potential boost to the value of the protocol.

In May, during a similar governance vote, the community approved the launch of Aave's version 3 (V3) protocol on Ethereum's Layer-2 Metis Network.