As new features and an upcoming decentralized governance update have been added to DeFi lending protocol Aave, total value locked in it is up more than 170% so far this month.
DeFi lending protocol Aave is on a roll, having a flood of value into the protocol.
Aave has increased the total value locked (TVL) in DeFi smart contracts more than 170% to over $1.3 billion this month, and more than doubled since August 10, according to DeFi Pulse, spurred on by the late July announcement of the ‘Aavenomics’ protocol governance testnet launch and the more recent release of credit delegation features on the platform.
The TVL surge coincides with a rise in price. The LEND token, valued at just above $0.30 at the start of August, is currently trading for $0.69.
The growth may show that DeFi protocols don’t require liquidity mining, a feature Aave has yet to roll out, to attract value and pump up protocol token prices; innovation is relevant, too.
Aave launched in January 2020 after evolving from EthLend, which raised nearly $18 million in a 2017 initial coin offering (ICO). Since then, Aave has become a leading platform for different DeFi offerings, including fixed and variable rate crypto loans and flash loans, giving borrowers access to lots of dollars in liquidity for the duration of a single Ethereum block (about 15 seconds).
Flash loans allow cryptocurrency traders to perform arbitrage, purchasing and immediately selling an asset with different counter-parties to profit from small differences in price. These core features helped Aave attract more than $100 million in TVL within the first half of the year of coming online.
After reaching that figure, it only less than two months to go from $100 million to over $1 billion in TVL.
Recently, Aave announced the final testing phase for decentralized protocol governance, dubbed “Aavenomics.” Upon launch, Aavenomics will convert Aave’s existing LEND protocol tokens to AAVE tokens at a rate of 100:1 and offer unique security features, using staked AAVE governance tokens as insurance for potential liquidity provider losses. In return, AAVE stakers will get to vote on protocol governance decisions and will give protocol fees.
Aave further announced Aave V2 earlier in August. V2, which is currently undergoing smart contract audits, will reportedly enable margin trading, vote delegation, and new capabilities for lenders and borrowers to swap their debt positions between various collateral tokens behind the scenes.
Credit delegation, a feature allowing authorized users to take loans using third-party assets as collateral, recently gained traction when crypto exchange DeversiFi borrowed more than $200,000 worth of Wrapped Bitcoin against collateral provided by Aave users.
With innovative developments coming hard and fast, the value of Aave LEND tokens is up more than 10x since June 1 and up more than 3,900% year to date. As DeFi continues to gain traction, Aave could continue growing rapidly if new features gain traction with it.