The popular DeFi protocol Aave is creating a new expansion plan when TVL reaches $ 18 billion. The team wants to harness demand and make DeFi mainstream through the launch of a new and improved V3 protocol. The V3 protocol reportedly addresses some of the fundamental network issues to enable secure cross-chain connections.
Aave is not only the earliest, but also one of the most popular DeFi platforms in crypto space. This project was developed in 2017 by a Swiss company of the same name. In just about five years, the total project amount is now locked to $ 18 billion (TVL). Surprisingly, that number is almost 100 times higher than originally expected by the creators of Aave.
The platform hopes to further accelerate this success momentum by expanding its operations to various blockchain networks. However, the platform is only designed to hold millions, and the current value has already reached billions, which can cause problems. So the team developed the V3 protocol. It addresses some of the basic issues found in current V2 protocols.
First of all, Aave is an open network that allows users to contribute to their code and freely improve their platform. While it helped the project grow, it also raised significant security concerns. Therefore, to address these issues, the V3 protocol only borrows supply caps to limit asset supply, borrowing caps to limit the amount of assets that can be borrowed, and assets provided as collateral. Provides asset separation that can be done.
In addition to risk mitigation measures, the V3 protocol also allows Aave to operate from seven different blockchains, including Fantom, Arbitrum, Optimism, and Harmony. The V2 protocol currently runs only on Ethereum, Avalanche, and Polygon. Activities from the Ethereum network can be moved to Layer 1 or Layer 2 solutions to address user and developer speed and performance concerns.
In addition, users of all these chains can vote for Aave’s governance decisions. Aave CEO Stanu Kulechov said the new protocol will be the foundation of future financial operations, just as IP and HTTP have become the backends of the Internet.
Most recently, Aave launched a service called Aave Arc. This initiative was introduced to help financial institutions interact and trade with authorized parties. This was a motivating factor for large investments to enter DeFi. This initiative is new, but has received $ 30 million from participants in SEBA Bank, Fireblocks, digital asset storage, transfer and payment platforms.
According to Kulechov, Aave may also consider other areas such as NFT collateralization. Aave’s self-sustaining governance system currently generates about $ 50 million annually.
