Aave (AAVE) worth has been on an absolute tear for weeks and in the present day the DeFi-token rallied to a brand new all-time excessive at $288.90.
The decentralized finance protocol is without doubt one of the hottest out there and the latest rally within the DeFi sector is without doubt one of the driving forces behind AAVE’s rally.
AAVE/USDT 4-hour chart. Supply: TradingView
Initially of 2021, AAVE worth was buying and selling at $83 and the latest rally seems to have bolstered the protocol’s surging complete worth locked, rising purchase quantity on spot and derivatives exchanges and the continued growth of Aave’s lending platform and flash mortgage issuance.
TVL soars to a brand new excessive
Knowledge from DeFi Pulse exhibits that Aave’s TVL rose from $2.03 billion on Jan. 1 and as (BTC) and Ether (ETH) worth went parabolic Aave’s TVL additionally surged.
Complete worth locked on AAVE. Supply: DeFi Pulse
Presently, Aave’s TVL sits at a brand new all-time excessive of $3.75 billion, making the platform the second-largest DeFi platform by TVL behind Maker (MKR).
The regular addition of recent tokens to the lending and borrowing protocol will increase the probability that its TVL will proceed to rise and assist AAVE retain its standing as one of many high DeFi tasks within the cryptocurrency area.
Staking drives demand for AAVE token
AAVE’s buying and selling quantity additionally surged at the start of 2021, rising from $200 million on Jan. 3 to a excessive of $928 million on Jan. 16.
AAVE worth vs. Reported buying and selling quantity. Supply: TheTIE
As AAVE worth reached a brand new excessive, it’s 24-hour buying and selling quantity notched a document $1.06 billion. This quantity surge is partially pushed by buyers buying extra tokens for staking, with 26.8% of the full provide of AAVE presently staked on the platform incomes an APY of 6.1%
Flash loans entice buyers
One more reason for AAVE’s latest surge is the expansion of its flash loans.
Flash loans enable cryptocurrency holders to collatoralize their portfolio to fund different purchases or new crypto purchases. The loans additionally assist buyers make the most of the worth of their tokens with out the necessity to promote see them and create a taxable occasion.
Since launching flash loans lower than 12 months in the past, greater than $1.7 billion have been issued and it’s anticipated that this determine will increse because the crypto bull market progresses.
Complete flash mortgage issuance to this point on AAVE. Supply: Messari
As could be seen within the chart above, essentially the most dominant token requested for flash loans is the DAI stablecoin, adopted by USDC and ETH. Knowledge from Messari exhibits that Aave issued $25 million in loans within the first half of 2020, $500 million in Q3, and practically $1 billion in This fall, together with $450 million in December.
The growth of the flash mortgage idea will seemingly entice extra customers to Aave, particularly since they can be utilized for arbitrage alternatives between DEXs, collateral swaps, self-liquidations and quite a lot of different functions throughout the DeFi sector.