The central theses
- Aave V3 launched today. The update focuses on allowing users to move assets between networks while improving capital efficiency and security.
- It will initially launch on Polygon, Fantom, Avalanche, Arbitrum, Optimism, and Harmony.
- Aave recently released Institutional Approved Pools and an NFT-based product called Lens.
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Aave has released its V3 update. The upgrade will initially be deployed on Polygon, Fantom, Avalanche, Arbitrum, Optimism and Harmony, with Ethereum to follow in the future.
Aave unveils V3
Aave, one of the largest decentralized finance protocols with over $11 billion in total locked value, has started its V3 upgrade.
The team behind the popular credit protocol announced the update in a press release Wednesday. Aave V3 focuses on improving capital efficiency and security while providing a better user experience through a new user interface. The team says users will benefit from clearer transaction flows and faster load times, and the protocol will be integrated into a number of DeFi’s most widely used products, including Instadapp, Debank, 1inch, ParaSwap, Zapper, DeFi Saver and Zerion.
Perhaps most importantly, the update allows users to move assets across different networks. In other words, someone with a position on Aave V3 on Arbitrum might choose to switch their liquidity to bullishness with little friction. Aave V3 also offers gas fee savings, improved efficiencies for borrowers and other risk mitigation features (including risk caps and exposure limits for newly listed assets). The update also adds features specifically designed to optimize user experience on Ethereum’s Layer 2.
The updated protocol will initially be rolled out on Polygon, Fantom, Avalanche, Harmony, and the Layer 2 Optimistic Rollup networks Arbitrum and Optimism. It is also planned to be deployed to the Ethereum mainnet at some point in the future. As with the protocol changes themselves, AAVE token holders voted on the networks in which the protocol would be launched via Aave’s improvement proposal process.
Polygon co-founder Sandeep Nailwal said the update was “a huge milestone,” adding that it “keeps pushing forward [Polygon’s] Mission to bring DeFi to the next hundreds of millions of people.”
Aave Founder and CEO Stani Kulechov also discussed the update with Crypto Briefing, noting that V3 is optimized for “Scalability, cross-chain and risk mitigation.” He added: “the Aave community will continue to develop and further decentralize the robust ecosystem around the protocol in the future,” and explains that Aave V3 will give the community oversight of important decisions affecting the development of the protocol.
Aave V3 was formally proposed in November when the team shared its cross-chain plans in a governance post. Alongside the V3 update, the leading DeFi project had a busy few months (the AAVE token was hit particularly hard, trading over 80% below its high) despite a major drop in the crypto market and a brutal hemorrhage across the DeFi space. Aave launched a DeFi product for institutions in January and has since entered the NFT space with a new socially-focused platform called Lens. It launched a testnet for the project on Polygon last month.
Disclosure: At the time of writing this article, the author of this article owned BTC, ETH and several other cryptocurrencies.
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