DEFIDEVELOPMENT

Aave V2 officially launched with the introduction of "Collateral Swap" feature, token surges by 38.7% in the past seven days.

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Aave V2 officially launched with the introduction of "Collateral Swap" feature, token surges by 38.7% in the past seven days.

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Aave Launches V2 Version

In the current decentralized finance (DeFi) space, the lending platform Aave is an entity that cannot be ignored. With its innovative products and secure, stable contracts, it has attracted nearly $2 billion in funds in the market. However, the biggest difference compared to another lending platform, Compound, is that Aave never stops at its current state. Yesterday, the platform launched the V2 version with more new features.

Driven by the positive sentiment towards V2 and the rebound in the DeFi sector, the token AAVE issued by Aave has surged by 38.7% in the past seven days, surpassing the $82 high set on November 20.

Innovative Collateral Trading Feature

Aave has optimized and added many new features in the V2 version, such as Flash Loan upgrades, Gas fee optimization, support for simultaneous fixed and variable rate borrowing, debt tokenization, direct repayment using part of the collateral, etc., further enhancing the platform's flexibility and fund utilization efficiency. The most noteworthy feature is the new "collateral trading feature" that no other lending platform currently has.

One of the biggest advantages of lending platforms is that traders can collateralize their crypto assets and borrow stablecoins or other assets for trading, achieving leverage. However, for traders, collateralizing crypto assets means losing liquidity. Unless the loan is repaid, the collateral cannot be traded. In the Black Swan event in March this year, many lending platforms suffered massive losses due to rapid depreciation of collateral, leading to forced liquidations. The "collateral trading feature" of Aave is a useful tool in such situations. Stani Kulechov, CEO of Aave, stated in a press release:

"The collateral trading feature is a useful tool to avoid liquidations. If the price of your collateral starts to drop, you can easily trade it for stablecoins without worrying about price fluctuations and potential liquidation risks."

According to the explanation in Aave's whitepaper, this feature is supported by Flash Loans. When a user initiates a collateral trading transaction, the contract function of Flash Loans is called, selling the user's collateral in a decentralized exchange and locking the purchased crypto asset as collateral for the user. This ensures collateral liquidity while maintaining sufficient collateral value. Stani Kulechov mentioned:

"You can swap your collateral from LINK to AAVE, from ETH to YFI, you can almost trade your collateral weekly or even daily."

Continuous Innovation and Optimization

Even though it operates the most basic lending business in the DeFi space, Aave can always introduce innovative products and more efficient protocol optimizations to the market at regular intervals. As Stani Kulechov stated:

"Every time Tesla releases a new car, the battery gets better. And every time we release a new protocol, it becomes more efficient."

The relentless drive for innovation and improvement, perhaps, is why so many prominent investors are willing to invest in and use the platform in the long term.