AAVE, Finnish for “ghost”, is creating a transparent and open infrastructure for decentralized finance.
It is well known that they are thought leaders and one of the most innovative protocols in the DeFi, as seen with their credit delegation which is the first under-collateralized loan and their recent partnership with RealT to offer Interest-Earning Tokenized Real Estate.
LEND is now migrating to a new token AAVE with an easy 2 click migration via the migration portal, with a fresh new finish on their site to facilitate the 100:1 swap.
This means that the total supply will only be 16 million; 13 million allocated to holders and 3 million allocated to the Ecosystem Reserve.
A new introduction for staking has been introduced for holders, named the Safety Module (SM). This is an insurance against shortfall events allowing holders to accumulate rewards in AAVE, as well as a percentage of protocol fees.
There are two types of staking:
- AAVE by itself
- AAVE/ETH pairing, which helps with market liquidity and also allows you to earn BAL along with trading fees.
The governance has also seen an upgrade. Governance Forums that lead onto AAVE Improvement Proposals (AIE) make sure that extensive discussion is had before changes can be pushed on-chain via voting.
AAVE held in cold-storage or used for staking can both be utilized for decision making. This can either be done by yourself or delegated to an AAVE protocol politician.
The Governance process is shown below:
In the words of Stani, founder of AAVE Protocol, “DeFi hasn’t seen its climax yet. Everything you have seen or interacted with is just the beginning.”
With their recent success of being granted an Electronic Money Institution license by the U.K. Financial Conduct Authority, AAVE is set to be on the right side of regulation moving forward, as DeFi evolves out of its infancy and provides real value to more and more people by the nature of its inclusivity.
With a protocol market size of around $1.5 billion dollars currently, it will be interesting to see whether the self-custody, decentralized governance and higher yields than traditional markets can capture the attention of mainstream investors, potentially providing enough incentive for a mass transition from CeFi into decentralized digital markets.
If so, this will be a very interesting couple of years.