Everything you need to know about Aave’s V3 rollout and what the future holds for AAVE

  • AAVE V3 to offer more flexibility to users
  • AAVE is witnessing some demand for top whales ahead of deployment

The Aave protocol and its community are currently preparing the deployment of the Aave V3 protocol. The latter will particularly target Ethereum [ETH] market, where that could be a big problem. A recent update from Aave founder Stani Kulechov revealed why the rollout is of great importance.

Read AAVE Price Prediction 2023-2024

A historical overview of Aave might be helpful in understanding why the Aave V3 protocol is important. According to the founder, DeFi summer and flash loans have been critical to the network’s growth after the rollout of Aave’s V1. The launch of V2 was supported by more innovation and big milestones. However, it also highlighted some risks, which the developers plan to address in Aave V3.

Kulechov noted that one of the key features planned for the Aave V3 Ethereum mainnet rollout is greater flexibility for users. The new version will provide more flexibility when staking, especially in risky market conditions.

Aave v3 users will be in a better position to implement risk mitigation measures in volatile and adverse market conditions. The move showcases the protocol’s efforts to make its platform safer for users in the future.

What are the potential implications for AAVE?

Adding an extra layer of security for users could be encouraging for future users. If this turns out to be true, then Aave will likely hit a high TVL in a short time, just like it did with previous iterations.

However, at the time of writing, AAVE was still struggling to rebound from its crash in the first half of November. The upgrade could reignite whales’ interest in the token.

Source: Glassnode

If the best addresses redeem AAVE, it may have positive price action. The distribution of AAVE’s supply this week already indicated that there was some demand for the major categories of whales.

For example, addresses holding between 100 and 10,000 coins have significantly increased their balances in the last 24 hours up to press time.AAVE supply distribution

There were, however, a few exits from higher address categories. Despite this, FX flows indicated that selling pressure slightly outweighed buying pressure. Foreign exchange flows have not recovered from the sharp drop in November. Slightly higher currency inflows than outflows suggested a net flow favorable to the downside.

AAVE exchange flow

Source: Glassnode

Investors should note that demand for AAVE was also highly correlated with the rest of the market. This means that AAVE’s ability to rebound may depend on market demand for DeFi, which will require market conditions to improve first.

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