Incentivizing liquidity depth on Monad

1. Goals:

North Star: % of collateralized lending on Aave, trading volume on Kuru.

Partners: Kuru (on-chain orderbook DEX), Aave DAO (v3.7 Monad instance) Duration: 90 days Budget: $2.0M equivalent (MON + partner-side matching; see §6)

Concentrate liquidity, don't rent it. Build durable orderbook depth on Kuru's core pairs so Monad's liquidity consolidates on one deep venue instead of fragmenting across shallow pools.
Make lending productive. Shift Aave-on-Monad from idle launch deposits to active borrowing that feeds on-chain strategies.
Prove the credit flywheel. Demonstrate the full loop — supply on Aave → borrow → deploy/exit on Kuru — works at size without leaving Monad.
Earn the liquidation-safety story. Show liquidations clear at low slippage, giving Monad a data-backed DeFi differentiator and the evidence base for future RWA collateral listings >> facilitate RWA issuance on Monad.
Keep the capital. Convert incentive-driven inflows into resident TVL that survives the taper.

OKRs on the chain-level:

Monad DeFi TVL: from ~$770M baseline → $1.1B, with ≤ 40% attributable to active emissions
Share of Monad DEX volume on top-3 venues: +10pp concentration (anti-fragmentation measure)
Net bridge flow: positive over the campaign; retention of ≥ 60% of campaign-attracted TVL at day 120 (30 days post-taper)
At least 2 new integrator protocols composing on the Kuru–Aave loop (vaults, structured products, loopers)
Zero liquidation cascade events (> 3% price dislocation on a liquidation) on incentivized pairs

#	Objective	Why it matters for the chain
1	Consolidate liquidity on canonical venues instead of fragmenting across shallow pools	Monad's DEX volume already exceeds $1B/month across many venues; depth concentration is what makes the chain usable for size
2	Prove the credit flywheel: deposit → borrow → deploy → exit without leaving Monad	Demonstrates Monad as a full-stack DeFi chain, not a farm-and-bridge-out chain
3	Convert launch capital into resident capital	Aave crossed $100M deposits in 48h on launch incentives; the chain needs that capital to survive the taper
4	Establish the liquidation-safety story as Monad's DeFi differentiator	Sub-second finality + orderbook depth = liquidations that clear without cascades; a claim no other new L1 is making with data
5	(Stretch) Open the RWA collateral path	Deep, low-slippage native venues are the prerequisite RWA issuers cite; this campaign builds the evidence base for an Aave governance listing

Why now. Aave v3.7 is live on Monad ($100M+ deposits in 48h, GHO native). Kuru runs a fully on-chain orderbook. Monad DeFi TVL sits at ~$770M with $1B+/month DEX volume spread across many shallow venues. Deep spot liquidity next to the lending market reduces liquidation risk, makes looping viable, and builds the evidence base RWA issuers ask for.

Most chain incentive programs rent TVL: emissions go to supply-side APY, capital arrives, emissions end, capital leaves, and liquidity fragments across a dozen shallow venues. This campaign rejects that tradeoff. It funds the one thing a lending market structurally needs — sustained orderbook depth at tight spreads on the venue where liquidations and loop exits execute — and links the two protocols with a cross-protocol loop bonus so the incentive itself enforces composability.