Aave Protocol (LEND) Monthly Report August 2020
August has been a record-breaking month for Aave in price action and total value locked in the protocol.
The Aave team continues to out-innovate the other DeFi lending platforms by introducing new features like credit delegation, native margin trading, and the onboarding of tokenized real estate to the platform.
The most exciting news is that Aave has been granted an Electronic Money Institution (EMI) license.
Let’s continue to break down each part of this amazing month Aave has had.
Recent News
Granted an Electronic Money Institution license
The U.K. Financial Conduct Authority has granted Aave’s parent company (Aave Limited) an Electronic Money Institution license that allows it to onboard UK users directly onto the platform by offering “digital cash alternatives”.
This is the same license that platforms like Coinbase and Revolut have in order to sell digital currencies in Europe.
The license opens up new opportunities that can allow the team to create more native feel applications where consumers can deposit directly into an Aave interest contract directly from their bank account or debit card.
Top Monthly Feature: Credit Delegation
Credit delegation allows depositors to delegate their credit line to a person they trust (single public address) or another smart contract dapp with predefined permissions of how and where they can use the borrowed funds.
This feature enables the delegatee to withdraw a loan from the delegators deposited assets and put the capital to use in the markets more efficiently than the original depositor would have.
Currently, this feature makes more sense for experienced DeFi users that already have a network of trusted associates they already transact with.
But we can see how new DeFi applications can be built on top of this use case like arbitrage and yield farming bots that can allow for regular users to take advantage of their idle capital access for specific opportunities the application identifies
Governance Development Progress
Governance is still under development and currently awaiting final audits before being brought to mainnet.
The Aave team understands that all good DeFi projects have a robust governance platform that allows stakeholders to participate in the direction of the project.
This is why the team has designed a governance platform that is comparable to their peers (Compound and MakerDAO) that are currently ahead in this development category.
Aave Tokenomics Revealed
The main takeaways from the new Aavenomics are the LEND token migration to AAVE will be 100:1 (100 LEND per 1 AAVE) with an additional 3M allocated for an ecosystem reserve fund, bringing the new total supply of AAVE to 16M.
The new AAVE token will be staked in the governance platform where the token holders can vote on AAVE improvement proposals and the economic incentives that disperse the ecosystem reserve funds for the benefit of the greater community.
Aave V2 New Feature Highlights
Too many new features for the lending, trading and governance platform have been announced to be able to cover them properly in this short update.
We will list all of the announced features but it’s recommended to visit the official announcement for the feature descriptions.
Aave V2 Announced Features:
- Repay with collateral
- Debt tokenization and native credit delegation
- Fixed-Rate Deposit
- Improved Stable Borrow Rate
- Private Markets (Tokenized Real Estate)
- Improved aTokens
- Gas Optimizations
- Security
- Debt Trading
- Collateral Trading
- Margin Trading
- Vote Delegation
- Cold Wallet Voting
- Distribution of Governance power to users
Network Highlights
Total Value Locked Reached 1B
The network deposits have increased by more than 370% in the last 30 days. A growth from 373M to 1.386B according to DefiPulse. This makes Aave the second DeFi protocol in history to cross the 1 BILLION locked assets milestone.
Outstanding Debt Increase
The protocol now has over 165M in total borrowed funds. This is a 56% increase in the last 30 days.
Unique Lenders Increase
The average daily unique addresses using the protocol has increased from 300 to 450+.
aTokens Velocity
aTokens continue to see an increase in holders and transaction amount. aDAI, the most popular token now has over 4K holders and regularly transacts up to 10M in on-chain transactions.
Token Metrics
Price Increase
For the second month straight the LEND token has doubled in value against USD.
With all of the new upcoming features and continuous platform adoption, there is no sign of where the price will stabilize.
Team Wallets
There has been no change in the team wallets for the last 42 days.
The team wallet currently holds 3.35% of the supply, which is 43.6M LEND.
Active Addresses
On August 12 a peak of 2.7K addresses was active, transferring LEND tokens. The average daily active addresses in the last 30 days have increased by 50% from 1K to 1.5K.
In/Out of the money
100% of the total LEND token holders are IN the money.
This indicates that most wallets last moved their LEND tokens when the price was lower, therefore are in profit since acquiring the token.
This is explained by the token being at its all-time high.
Bull vs Bear
Bull
Aave is introducing new features like native margin trading and credit delegation that allows them to capture a new stream of users compared to their peers.
More importantly, these new features create additional places where governance can vote in protocol fees, like for the margin trading, that can be rewarded back to the governance participants.
With these new feature developments, the Aave team shows no signs of slowing down. The effects of these new features and the new tokenomics are not yet known and LEND token holders may remain bullish for the time being.
Bear
The price of LEND has risen 2x in a short period of time, even up 5x in the last 60 days, in what can be seen as a DeFi token bull market.
LEND’s total value locked is comparable to the other lending protocols like Compound and Maker but the size of the outstanding loans is about 10% of Compound, Aave’s outstanding debt is $73M versus Compound’s $732M.
With the circulating supply market cap of both tokens being around $400M, LEND can be seen overvalued compared to Compound’s (COMP) much larger loan market size.
The opinions expressed during the Bull vs Bear series are solely those of the individuals involved and do not necessarily represent those of Multi.io and its employees. The goal is to present a view from both sides of the market.
Upcoming News & Events
The most anticipated news for the Aave is the completion of the governance contract audits.
Once the governance platform is live, the LEND to AAVE migration can continue.
Information & Data Sources
Dune Analytics Aave General KPIs Dashboard
Dune Analytics aTokens Dashboard
