The price of AAVE – the native token of the Aave DeFi protocol – is accumulating gains of 34% since the month started despite the overall weak performance of cryptocurrencies during that same period.
Just this morning, the token is rising over 8% at $78.20 per coin while trading volumes are surging 74% in the past 24 hours with more than $460.95 million worth of AAVE exchanging hands during that period as per data compiled by CoinMarketCap.
On a relatively slow day for crypto, AAVE’s positive performance is particularly interesting and calls for a closer look at what is going on with the protocol that is attracting sos much interest from investors.
What’s New with Aave?
On 7 July, AAVE proposed the creation of a stablecoin for its ecosystem. GHO, as the developing team named it, would come to strengthen AAVE’s value proposition by allowing users to borrow and lend the coin while the project’s treasury may also participate in the minting of the token to earn interest payments to further strengthen Aave’s war chest.
Borrowers will receive GHO based on how much collateral they pledge on the Aave network. Meanwhile, lenders will mint GHO by depositing money into the protocol.
The interest rate paid on GHO loans will be determined by the AaveDAO and the same goes for GHO lenders.
The developing team believes that the widespread use of L2 networks on Ethereum will help accelerate the adoption of GHO. In addition, Aave’s decentralized and fully collateralized model remains an attractive choice at a point when centralized borrowing and lending platforms are collapsing.
Aave has proven resilient despite the latest weakness in the crypto market as reflected by the token’s recent positive performance and the fact that the protocol continues to occupy the third place in the DeFi ecosystem by total value locked (TVL) as per data from Defi Llama.
According to Aave’s official website, the protocol’s TVL currently stands at $8.4 billion across the 7 networks and 13 markets it currently supports.
What’s Aave?
Aave is a decentralized crypto lending protocol that allows users to borrow money from a pool of assets by pledging collateral. Transactions on Aave can currently be settled on multiple chains including Ethereum, Avalanche, Polygon, and Arbitrum (an Ethereum L2 protocol).
Aave determines how much collateral borrowers must pledge to access a loan by analyzing the volatility of the pledged asset. If volatility is high, the loan-to-value ratio (LTV) is low and vice versa.
Investors can earn money with Aave (AAVE) by supplying their assets to the liquidity pool. Through this mechanism, they earn a portion of the trading fees and interest payments collected by the protocol from borrowers.
Moreover, AAVE token holders can also stake their assets to secure the network and earn rewards for this activity.
Meanwhile, the protocol has established the Aave Community Treasury, which is a pool of funds that have been gathered progressively from trading fees and other rewards to be invested into the project’s growth initiatives and other similar activities.
Aave is a community-governed project whose governance is run by over 116,000 AAVE token holders. These investors make decisions about the protocol’s future by submitting proposals for voting.
Aave Price Prediction (2022)
Despite this month’s uptick, AAVE accumulates a 69% loss since the year started and it seems too early to tell if this micro rally could lead to a full-blown reversal in the latest price trend.
That said, the short-term outlook is encouraging as indicated by momentum indicators as the Relative Strength Index (RSI) is rising above 50 (bullish) while the MACD just moved to positive territory for the first time since April this year.
Moving forward, the next resistance to watch would be found at $125 per coin resulting in a 59% upside potential if that target is hit.
Forecasts from Wallet Investor are also favoring a bullish outlook based on its analysis of a set of technical indicators. In this regard, the algorithm expects that the price could rise to $86.3 per coin resulting in a 10% upside potential for this period.
In line with this estimate, Gov.Capital has also drafted a bullish Aave price prediction for the next 14 days as the algorithm expects to see the price rising to $87.3 per coin based on an analysis of the price trend.
Meanwhile, Aave is not the only token with short-term upside potential. One new token is taking over the P2E space by storm and its name is Battle Infinity (IBAT). The token is in pre-sale stage now and investors can find out more about it by joining the project’s official Telegram group.
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