Aave V3: What to Expect

The DeFi lending protocol Aave is going through some big changes! After two years of substantial growth, the Aave Request for Comment, or ARC to Aave Governance is ready for community approval! Aave V3 means more decentralization, increased capital efficiency and enhanced security for the project.

What is Aave

Aave is an open source DeFi lending protocol which allows users to borrow a wide variety of cryptocurrencies. Traditional cryptocurrency lending apps are controlled by a single entity. Aave – on the other hand – is unique in comparison to other crypto lending platforms, as it is completely Decentralized. This means that the borrowing and lending services through Aave are conducted on a peer-to-peer basis, using smart contracts on the Ethereum blockchain.

Aave originally started as ETHLend – back in 2017 – and was one of the first lending platforms to be built on the Ethereum blockchain. Currently Aave is the fourth most popular DeFi app in the world, as well as the world’s third most popular lending and borrowing Dapp. Aave offers a wide variety of different loans and supports 17 cryptocurrency assets.

Killer Whale has been bullish on Aave since inception. In fact, Aave was one of the first coins to make it on to the suggested coin list, because of its price action, and the powerful project behind it. Killer Whale Premium Signals subscribers have no doubt familiar with how many successful Aave signals were launched.

Avve and the LEND Token

LEND is an ERC-20 token, which was originally intended to be a utility token; however, after ETHLend rebranded to Aave, it became a governance token, allowing its holding users to vote on protocol changes to Aave. These protocol changes typically include interest rate models, liquidation configurations, and the addition or removal of assets. currently 80% of the fees generated on Aave are swapped to the LEND token and then burned. The more fees generated on Aave, the more LEND tokens are burned; therefore, causing the overall supply of the lend token to become scarcer. The remaining 20% of the fees generated on Aave are used to incentivize the liquidity providers.

V3

The Aave V3 upgrade will introduce quite a few new features. Some of the most notable include the “Portal” feature, which allows assets to flow between V3 markets over different networks. “High Efficiency” mode will allow borrowers to receive the highest borrowing power out of their collateral. “Isolation Mode” protects the protocol by placing debt ceilings on newly listed assets with low market liquidity, only permitting a certain amount of borrowing.

Some of the other changes which will come with Aave V3 include additional protection through various risk caps, along with other tools. There will also be improvements to Layer 2 networks focused around improving reliability, and improvements to the organization of the codebase, to facilitate and more greatly incentivize community participation and contribution.

Aave V2 Upgrade Price Reaction

Aave V2 launched in December of 2020, only one month after Aave was initially listed. Therefore, it is difficult to determine how much of an impact Aave V2 actually had on Aave’s price action. Aave did however jump in price by a whopping 460% on January 3rd, 2021. The upgrade to Aave V3 could very well be indicative of another jump in price action. Many tokens have positive price reactions after upgrades to the network take place, ergo it would make sense if Aave did the same.

Conclusion

Aave V3 represents a big step forward for DeFi cryptocurrency. Aave is a prime example of the profound growth within the DeFi sector, as well as the growing public interest in DeFi projects and tokens. Be sure to check out the Killer Whale Products Page to see which Killer Whale Signals and Strategy’s are right for you! If DeFi is your thing, check out Killer Whale Premium Signals . Signals are launched for DeFi tokens including Aave are launched all the time!

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