Original | Odaily Planet Daily (@OdailyChina)
Author｜Nan Zhi (@Assassin_Malvo)
In the past two days, the Trump family project WLFI (World Liberty Fi) has continuously increased its holdings of AAVE, and its current holdings are worth about $1.5 million. Perhaps stimulated by the news, AAVE surged 20% in 24 hours, and was temporarily reported at 385 USDT at the time of writing.
Under the underlying of the good performance of the coin price, we can see that Aave's TVL and protocol revenue data have reached new highs. At the same time, Emilo, the engineering VP of Aave developer avara, released a long article about the Aave V4 version after a lapse of 7 months. In terms of products, data and coin prices, Aave has ushered in a new round of explosive growth. Odaily will sort out the details of these aspects in this article.
Fundamentals
Aave Business Overview
Aave started in 2017. Its predecessor was ETHLend. Its core business is a lending protocol. The protocol earns revenue by charging commissions on the interest of users' loans. Currently, Aave V3 has been deployed to 11 chains.
In addition to the lending protocol, Aave has launched its native stablecoin GHO, but its current application scope is relatively small and will not be discussed in detail here.
Protocol core data
According to DefiLlama data, Aave's TVL, coin price, and total protocol revenue have all experienced explosive growth in the past few months.
- Among them, TVL has exceeded the previous high in October 2021 and has reached US$22 billion;
- The lowest point of the currency price this year was about 80 USDT. In early September, it broke through the high point of 140 USDT in March this year, and began to rise slowly, and exploded in late November.
- The protocol's total daily revenue exceeded the second highest point in September 2021, and is close to the highest point at the end of October 2021. The weekly revenue has set a record high, reaching 22.97 million US dollars this week, surpassing MakerDAO to rank fifth on the Ethereum network, which is 40% of Uniswap (the full-chain revenue is basically the same as Uniswap).
Recent Developments
Aave's recent actions are mainly focused on the promotion of business scope and cooperation, including the deployment of Aave V3 on the Linea network, deposit incentives for PYUSD, and cooperation with Balancer.
- Network expansion: 3 days ago, Aave initiated a proposal vote to deploy Aave V3 on Linea. The highlight is that Aave DAO promises to redistribute all airdrop rewards from liquidity mining, GHO secondary liquidity incentives or Linea ecosystem to Aave users. As of 22:00 today, the proposal currently has a 100% support rate.
- Funding incentives: An additional annualized 4% deposit incentive will be launched for PYUSD. The incentive will last for 6 months, with a target total deposit amount of 75 million units. If the amount of PYUSD deposits exceeds this indicator, the incentive will be evenly divided.
- External cooperation: including cooperation with Balancer to introduce liquidity into the Aave market and optimize the returns of liquidity providers; launching stkGHO on Pendle, etc.
V4 Outlook
This morning, Emilo, the engineering VP of Aave developer avara, released a long article previewing the Aave V4 version. Aave forwarded it and said that the V4 version is coming soon.
What are the core changes in V3?
In 2022, Aave launched version V3, in which the core changes in the lending protocol business include:
- Portal system: allows assets to flow seamlessly between Aave V3 markets through different networks, for example, the original A token can be burned on Ethereum and then re-minted on Polygon;
- Efficient Mode (eMode): allows borrowers to achieve the highest borrowing capacity from their collateral (divided into asset classes, different borrowing ratios can be obtained based on the type of borrowing token);
- Isolation mode: Limiting the exposure and risk of newly listed assets to the protocol by setting a specific debt ceiling;
What does V4 want to do?
According to the Aave community proposal, V4 will build on the successful features of V3 (eMode, isolation mode, etc.), improve capital efficiency, and enhance integration with GHO. Its ultimate goal is to create a true, immutable, permissionless financial layer.
Unified Liquidity Layer
V4 will shift from the monolithic, independent market-oriented design of Aave V3 to a more flexible, fully modular design - this design concept is called the "hub-spoke" architecture, which is a further abstraction of the portal concept of the V3 version.
The liquidity layer manages the caps, interest rates, assets, and incentives for supply and borrowing, allowing other modules to extract liquidity from it. Compared to previous versions, the new liquidity layer allows Aave DAO to add new lending modules and remove old modules in the future without migrating liquidity.
Under this architecture, eMode no longer exists, and previously unsupported operations such as pledging LP and lending RWA assets can be implemented.
At the same time, the isolation model will no longer exist, and long-tail assets will exist on new hubs and spokes.
