The central theses
- Aave has announced the next update to its DeFi Credit Protocol V3 and related features.
- Most importantly, the upgrade will include support for multiple blockchains and support for Layer 2 networks.
- It will also include various improvements related to the user experience, risk management, and token listing process.
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Aave has released an update that describes V3 of its protocol and the new features that will be included in the update.
V3 will have Layer 2, interoperability functions
Aave’s latest post suggests that the V3 update is “ready to build the next-generation Layer 0 DeFi protocol,” and notes that it does user experience, capital efficiency, decentralization and security will improve.
The update will introduce several notable features, including support for various Layer 2 networks on Ethereum. The project says this will “improve user experience and reliability”. Presumably, the feature will reduce fees and transaction times by avoiding the need to move funds across Ethereum’s often congested network.
V3 will also include a cross-chain feature called Portal, which will allow assets to be moved between Aave deployments on different networks, including Ethereum, Solana, Polygon, Fantom, and others.
Even more functions in V3
Another upcoming feature is a highly efficient mode. This will help users get the highest loan rates and returns, and automatically optimize users’ investments without having to seek out the best opportunities.
The update will also decentralize the listing of new assets so that Aave Governance can grant different companies the right to list assets on the platform through an on-chain vote. Currently, the listing of a new asset on Aave in V2 requires a lengthy offer process.
Ultimately, the upgrade will bring about improvements in risk management, such as the isolation mode that introduces debt ceilings. It will also introduce supply caps, credit caps, and various other restrictions that can be set by governance members and administrators.
Aave is the second largest DeFi platform
According to metrics site DeFi Pulse, Aave is currently the second largest DeFi platform by total banned value. The platform currently has $ 13.8 billion in its contracts.
In addition to offering a deposit and loan market, the platform is best known for running Aavegotchi – a range of non-fungible tokens with a ghost mascot.
The project has not yet announced when V3 will go live.
Disclaimer: At the time of writing, this author held less than $ 100 in Bitcoin, Ethereum, and Altcoins.
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