Wednesday, June 23, 2021

Aave hits record $288 high as demand for flash loans and staking increases

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Aave (AAVE) value has been on an absolute tear for weeks and immediately the DeFi-token rallied to a brand new all-time excessive at $288.90. 

The decentralized finance protocol is likely one of the hottest out there and the latest rally within the DeFi sector is likely one of the driving forces behind AAVE’s rally.

AAVE/USDT 4-hour chart. Supply: TradingView

Initially of 2021, AAVE value was buying and selling at $83 and the latest rally seems to have bolstered the protocol’s surging whole worth locked, rising purchase quantity on spot and derivatives exchanges and the continued development of Aave’s lending platform and flash mortgage issuance.

TVL soars to a brand new excessive

Knowledge from DeFi Pulse reveals that Aave’s TVL rose from $2.03 billion on Jan. 1 and as (BTC) and Ether (ETH) value went parabolic Aave’s TVL additionally surged.

Whole worth locked on AAVE. Supply: DeFi Pulse

Presently, Aave’s TVL sits at a brand new all-time excessive of $3.75 billion, making the platform the second-largest DeFi platform by TVL behind Maker (MKR).

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The regular addition of latest tokens to the lending and borrowing protocol will increase the probability that its TVL will proceed to rise and assist AAVE retain its standing as one of many prime DeFi tasks within the cryptocurrency area.

Staking drives demand for AAVE token

AAVE’s buying and selling quantity additionally surged in the beginning of 2021, rising from $200 million on Jan. 3 to a excessive of $928 million on Jan. 16.

AAVE value vs. Reported buying and selling quantity. Supply: TheTIE

As AAVE value reached a brand new excessive, it’s 24-hour buying and selling quantity notched a file $1.06 billion. This quantity surge is partially pushed by buyers buying extra tokens for staking, with 26.8% of the full provide of AAVE presently staked on the platform incomes an APY of 6.1%

Flash loans entice buyers

Another excuse for AAVE’s latest surge is the expansion of its flash loans.

Flash loans permit cryptocurrency holders to collatoralize their portfolio to fund different purchases or new crypto purchases. The loans additionally assist buyers make the most of the worth of their tokens with out the necessity to promote see them and create a taxable occasion.

Since launching flash loans lower than 12 months in the past, greater than $1.7 billion have been issued and it’s anticipated that this determine will increse because the crypto bull market progresses.

Whole flash mortgage issuance to this point on AAVE. Supply: Messari

As could be seen within the chart above, probably the most dominant token requested for flash loans is the DAI stablecoin, adopted by USDC and ETH. Knowledge from Messari reveals that Aave issued $25 million in loans within the first half of 2020, $500 million in Q3, and almost $1 billion in This autumn, together with $450 million in December.

The enlargement of the flash mortgage idea will possible entice extra customers to Aave, particularly since they can be utilized for arbitrage alternatives between DEXs, collateral swaps, self-liquidations and quite a lot of different purposes throughout the DeFi sector.