Aave Token Surges Amid Protocol Economic Changes

Over the past week, the native coin of the DeFi protocol Aave (AAVE) has risen by 9%, reaching $104. This increase followed a proposal for a ‘fee switch’ and other economic updates.

On July 25, the founder of Aave Chan Initiative (ACI), Marc Zeller, launched a ‘temperature check’ for a new governance initiative involving the redistribution of transaction fees.

The ‘Buy and Distribute’ component of the update aims to use the protocol’s fee income to purchase AAVE on the secondary market.

“The difference in user experience compared to the current situation is minimal or nonexistent, but in terms of Aave’s sustainability, this is a paradigm shift. The new system will also ensure constant demand for the asset. It is proposed to fund this program from the protocol’s net surplus income,” the proposal states.

Following the publication of the ‘temperature check,’ the coin’s market capitalization jumped from $1.3 billion to $1.5 billion. At the time of writing, the figure stands at $1.55 billion. The total value locked in the leading lending platform’s assets exceeds $36 billion.

The rise in metrics coincided with a general positive trend in the crypto market, yet the subsequent correction demonstrated AAVE’s resilience.

On July 29, the Aave Labs team announced that the DAO approved the third version of the pool for the Lido staking platform, utilizing stETH and wstETH.

The Aave DAO just approved a V3 pool designed specifically for @LidoFinance stETH and wstETH.

This new Lido pool is the first custom deployment on Aave V3, showcasing the protocol’s versatility and capability to optimize specific use cases. pic.twitter.com/sd2pNJJ6ZZ

— Aave Labs (@aave) July 29, 2024

“The new Lido pool is the first custom deployment on Aave v3, demonstrating the protocol’s versatility and its ability to optimize specific use cases,” the team stated.

The decision allows the protocol to “optimize ETH borrowing dynamics by configuring collateral and interest rate parameters in an isolated market,” Aave Labs emphasized.

Earlier in July, the decentralized autonomous organization behind the development of the Aave DeFi protocol issued the GHO stablecoin on the Arbitrum L2 solution network.

Previously, developers unveiled the roadmap for the fourth version of the protocol, which is expected to be built on a “completely new architecture.”