Following unanimity in favor of a governance proposal, the decentralized lending and borrowing protocol Aave has launched its third iteration on the Ethereum network.
When staking or borrowing correlated assets like stablecoins and liquid staking derivates, the Aave V3 update will concentrate on reducing user risk and increasing capital efficiency (High-Efficiency Mode) (LSDs). Derivative contracts known as liquid staking derivatives allow customers to keep an asset’s liquidity while staking it for a payout.
High-Efficiency Mode, commonly known as eMode, enables consumers to take use of their collateral’s greatest borrowing power for linked assets. The Ethereum blockchain now allows users to stake bigger sums of assets, such as wstETH (wrapped staked Ethereum), for rewards.
The update also aims to optimize gas utilization; according to Aave, this will result in a 20%–25% reduction in gas expenditures across all functions. On Ethereum, gas is a transaction fee that is given to validators.
According to DeFiLlama, the Aave protocol has $4.56 billion in total value locked (TVL), a rise of 23.37% over the last 30 days.
The price of the Aave token (AAVE), which may be used as collateral on the platform, is $86.73 as of right now.
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