Aave v3 will launch on the Ethereum network. Seven assets, including USDC and DAI, are supported by the first deployment.
After a successful DAO vote, the DeFi lending platform Aave will publish the third edition of its protocol on Ethereum.
Seven assets will be supported by Aave v3 on Ethereum: wrapped bitcoin, wrapped ether, wrapped staked ether, USDC, DAI, link, and aave. These assets were recommended by Chaos Labs, the DeFi risk manager. In early January, the Aave DAO voted in support of Chaos Labs’ risk-off strategy for the first deployment of Aave v3 on Ethereum.
All asset prices, except wrapped bitcoin and wrapped staked ether, will originate straight from a Chainlink feed. Chainlink is an oracle protocol that may supply smart contract protocols with data like price feeds. According to Aave creator BGD Labs, the wrapped staked ether and wrapped bitcoin pricing feeds will depend on price adaptor smart contracts. These price adapter smart contracts continue to use Chainlink feeds.
Aave v3 on Ethereum will only have one eMode enabled. The eMode feature of Aave maximizes capital efficiency for collateral and borrowed assets with a high degree of price correlation. eMode will initially only be supported for ether-correlated assets. Consequently, the eMode for Aave v3 on Ethereum will support only wrapped ether and wrapped staked ether.
The introduction of Aave v3 on Ethereum enhances the DeFi protocol’s multi-chain strategy. The third version of Aave’s loan application indicated the project’s desire to distribute its protocol over numerous networks. Six chains, including Avalanche, Optimism, Polygon, Fantom, Harmony, and Arbitrum, have already released Aave v3.
Aave v2 on Ethereum is the biggest DeFi lender in terms of total locked volume. According to DeFiLlama, the protocol handles about $3.5 billion worth of assets. The third version of the protocol will coexist with the previous version. This is due to the DAO’s decision to release v3 for the first time rather than deprecate v2. Therefore, customers have the opportunity to migrate their locations from version 2 to version 3. BGD Labs has been developing a solution to facilitate relocation.
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