The course of Aave (AAVE) has been on an all-time high for weeks. Today the DeFi token hit a new all-time high of $ 288.90.
The decentralized financial protocol is one of the most popular on the market. The recent rally in the DeFi sector is one of the driving forces behind the AAVE rally.
In early 2021, the AAVE rate was $ 83. The recent rally appears to further solidify the protocol’s rising overall value. Some of the reasons for the increase were the increasing purchase volume on spot and derivatives exchanges and others development the Aave lending platform and the issuance of flash loans.
Total included value rises to a new high
Data from DeFi Pulse shows that the total trapped value of Aave reached $ 2.03 billion on Jan. 1. When (BTC) and ether (ETH) then rose parabolically, the TVL also rose sharply.
Currently, the total included value of Aave is at a new all-time high of $ 3.75 billion. This makes the platform the second largest DeFi platform in terms of total value included behind Maker (MKR).
With new tokens added to the credit log all the time, it is very likely that the total included value will continue to rise and AAVE will continue to hold its position as one of the top DeFi projects in the cryptocurrency space.
Staking increases demand for AAVE tokens
AAVE’s trading volume also skyrocketed from $ 200 million on January 3 at the beginning of 2021 to a high of $ 928 million on January 16.
When the AAVE price hit a new high, the 24-hour trading volume hit a record $ 1.06 billion. This increase in volume is partly due to investors buying more tokens for staking. 26.8 percent of the total supply of AAVE is currently used on the platform for staking and generates an annual return of 6.1 percent.
Flash loans attract investors
Another reason for AAVE’s surge is the growth in flash lending.
Flash loans allow cryptocurrency holders to use their portfolio as collateral to fund other purchases or new crypto purchases. The loans also help investors utilize the value of their tokens without having to sell them and conduct a taxable trade with them.
More than $ 1.7 billion has been spent since flash credit was first launched less than 12 months ago. This is expected to become much more so as the crypto bull market continues.
As can be seen in the graphic above, the stablecoin DAI is the most in demand for flash loans. This is followed by the USDC and ETH. Data from Messari shows that Aave issued loans of $ 25 million in the first half of 2020, $ 500 million in Q3, and nearly $ 1 billion in Q4 Has. Of which $ 450 million in December.
The expansion of the flash loan concept will likely bring more users to Aave. Especially since they can be used for arbitrage between DEXs, collateral swaps, self-liquidations and many other applications in the DeFi sector.
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