Aave price is up nearly 3,300% higher since April. Here’s why

Written by: Michael Harris
August 18, 2020
  • Aave has published the new version of its protocol - Aave V2
  • LEND price is trading around 100% higher in August, totalling gains since April to nearly 3,300%
  • The price action has stopped above $0.60 as there is a 127.2% Fibonacci extension line

Aave (LEND) price is trading around 100% higher in August, totalling gains since April to nearly 3,300%. One of the key reasons behind the spectacular ascendance in Aave price is the new “Aave V2” protocol. 

Fundamental analysis: Sitting at the forefront of DeFi world

Aave, the open-source DeFi protocol, has published the new version of its protocol, Aave V2. The money market protocol is now worth $1 billion in market size, thanks to various innovations like flash loans, stable rates, the Aave tokens rapidly-growing balance model, as well as Credit Delegation.

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The new version is expected to keep moving the boundaries in the DeFi world. In the first phase of the project, the Aave Market supported 19 assets, enabling various communities to use DeFi services. The Uniswap Market was a revolutionary market that introduced new kinds of collateral to DeFi. 

The main objective of the protocol is to boost the mass adoption of DeFi. One of the biggest obstacles is the high gas prices, making it really hard to use for small amounts. Apart from that, the necessity to interact with several protocols in order to carry out a certain function furtherly hurts the user experience. The new version will certainly welcome a new group of users and improve the user experience. 

In order to repay with a share of their collateral, the users will have to withdraw the collateral first, purchase the borrowed asset with it and ultimately pay off the debt and gain access to all of the deposited collateral. 

To do this, the users will have to conduct at least 4 separate transactions on several protocols. In the new version, the Aave users will be able to pay the debt or close their position by paying with the collateral in only 1 transaction. 

Another great feature of the V2 is the debt tokenization and native credit delegation. This means that the users will earn tokens that represent their debt. The tokenization of debt will allow for native credit delegation in the protocol.

The users will also be able to use other useful services such as native position management from cold storage and user-defined yield farming strategies. Additionally, the upgrade will also improve the Stable Borrow Rate feature as well as allow users to open private markets to promote tokenized assets of all types.

Technical analysis: Spectacular rise

LEND price is trading 100% higher in August, hitting the fresh record high today near $0.64. The previous all-time high of $0.4850 was set in February. In total, LEND has gained over 3,280% since April. 

Aave price daily chart (TradingView)

The price action has stopped above $0.60 as there is a 127.2% Fibonacci extension line. The next extension line sits at $0.7850 and is likely to act as a next target for the buyers should there be a weekly/monthly close above $0.62.

Summary

The lending protocol Aave released specifications of the upcoming Aave V2, expected to take its DeFi protocol to more advanced levels. In the meantime, the price action hit a fresh record high, now trending 100% higher in August.