The DeFi altcoin AAVE has pushed itself back into the top 50 global cryptocurrencies with a monthly increase of around 40 percent. The reason for the AAVE momentum is a proposal to reorganize the protocol.
AAVE is the cryptocurrency of the month in August: The price curve has increased by around 40 percent over the last four weeks and, at around 135 US dollars, AAVE is currently trading at a level that was last reached stably in spring 2022. AAVE is based in the Decentralized Finance (DeFi) sector and organizes lending transactions in its ecosystem. AAVE is now offering a far-reaching plan discussed, the so-called “umbrella”, which is considered to be the trigger of the rally.
Put simply, the “Umbrella Proposal” is about changing the way failed lending transactions are handled. So far, AAVE itself has been planned as the last line of security. If a loan has to be liquidated, AAVE is therefore automatically sold. In the future, a second layer of security is to be introduced to take the selling pressure off AAVE. In addition, fees collected from AAVE are to be used in part to buy back coins on the secondary markets. Experts from Deelabs see further advantages in the move, such as a new bonus program for recruiting new users.
Sea DeFiLlama The AAVE protocol currently organizes lending transactions with a total volume of almost 13 billion US dollars, making it the clear market leader in this sector. With daily fee income averaging around 1 million US dollars, AAVE is also doing better than the competition. Aur.ron expects X the situation: If the fee revenue remains the same, he sees AAVE as undervalued. AAVE’s current market capitalization is $2 billion and the revenue should allow for much higher valuations in the medium and long term, says Aur.ron.
Conclusion: AAVE on the winning track – institutional investors are joining in
US media reports suggest that institutional investors have also analyzed the “umbrella” for AAVE in recent weeks and are now getting involved. AAVE is designed as a DAO (Decentralized Autonomous Organization) and a referendum on the “Umbrella Proposal” is still pending. The current AAVE momentum signals approval. It seems as if one of the oldest DeFi projects is about to implement reforms and thus make AAVE future-proof. Deelabs is already thinking of an AAVE that will also take over risk management for other protocols and thus generate further income. Also important for you as an investor: Of the 16 million AAVE originally generated, almost 15 million are already in circulation, so the value is unlikely to be diluted by new tokens coming onto the market. Anyone interested in innovations in DeFi should also keep an eye on AAVE at the moment.
