DeFi Lender Aave Deploys Version 3 on Ethereum Network

Aave v3 allows users to benefit from the highest borrowing power out of their collateral.

AccessTimeIconJan 27, 2023 at 12:03 p.m. UTC
Updated May 9, 2023 at 4:06 a.m. UTC

Decentralized lending and borrowing protocol Aave has deployed its third version on the Ethereum network following unanimous support for a governance proposal.

The Aave v3 upgrade will focus on mitigating user risk and improving capital efficiency (High Efficiency Mode) when staking or borrowing correlated assets like stablecoins and liquid staking derivates (LSDs). Liquid staking derivatives are derivative contracts that allow users to retain liquidity of an asset while staking it for a reward.

High Efficiency Mode, also called eMode, allows users to capitalize on the highest borrowing power out of their collateral for correlated assets. Users can now leverage larger amounts of assets like wstETH (wrapped staked ether) and stake it on the Ethereum blockchain for rewards.

The upgrade is also focused on gas optimization, with Aave stating that it will reduce gas costs across all functions by 20%-25%. Gas is a transaction fee on Ethereum that is paid to validators.

The Aave protocol has $4.56 billion in total value locked (TVL), an increase of 23.37% over the past 30 days, according to DeFiLlama.

The Aave token (AAVE), which can be used as collateral on the platform, is trading at $86.73, little changed in the past 24 hours.


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Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.

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