After Uniswap, can DeFi giant Aave continue the mining boom?
Editor's Note: This article comes fromDeepChain (ID: deepchain-eva), Author: Gisele, reproduced by Odaily with authorization.
Editor's Note: This article comes from
DeepChain (ID: deepchain-eva)
DeepChain (ID: deepchain-eva)
Last week, after Uniswap issued coins and carried out a huge airdrop, it once again aroused the market's attention to liquidity mining.
After Uniswap, Aave is about to start its liquidity mining.
Aave is a lending giant on Ethereum, with a lock-up volume of more than 1 billion US dollars, ranking second in the DeFi market, and its market value has risen all the way, from outside the 500 to the current top 30.
Everyone in the market is also highly looking forward to Aave's liquidity mining, and whether it can take over Uniswap and bring a new round of enthusiasm for mining?
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After Uniswap, lending giant Aave will start liquidity mining
Recently, the liquidity mining boom that has lasted for nearly three months seems to be weakening. Although there are more and more new mines in the market, the life cycle of new projects is getting shorter and shorter.
Until Uniswap announced the issuance of tokens, 150 million UNI tokens were airdropped to early participants. Users who meet the requirements can get at least 400 UNI, worth more than 1,000 US dollars. For a while, the entire cryptocurrency industry was boiling over, and the heat of liquidity mining swept across again.
As the largest DEX on Ethereum, Uniswap is also an indispensable part of liquidity mining for many DeFi projects. The amount of locked funds and the number of active users are both in the top position, so its own liquidity mining is bound to increase To a certain extent, it affects the heat of the market.
After Uniswap, Aave, another giant project in the DeFi market, is also expected to start liquidity mining.
It can be expected that in the near future, the Aave community will carry out token migration. At that time, the token migration will be carried out at the exchange ratio of 100 LEND: 1 AAVE.
The total amount of AAVE tokens is 16 million, of which 13 million will be exchanged by LEND holders, and the additional 3 million will be used for the development reserve of the Aave ecosystem, part of which will be used for ecological incentives and part of which will be used for security incentives. Obtained through mining.
This means that Aave will also start liquidity mining after the token migration. Although the mining rules have not yet been released, it is still a giant project after all, and users' expectations are naturally high.
At present, Aave's lock-up volume in the DeFi market is nearly 1.3 billion US dollars, ranking second only to Uniswap. Therefore, everyone has speculated whether Aave will have an impact on the entire DeFi market after the launch of liquidity mining.
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Aave's advanced road, from a hundred-fold decline to a hundred-fold increase
Speaking of Aave or LEND, many friends have the impression of 100 times coins. At this time, the old leeks held a handful of bitter tears: "Your hundred-fold coins are also my hundred-fold coins, but it's a pity that I have lost a hundred times."
Yes, today's DeFi giants have also experienced the darkest moment, and the price of the currency has dropped by as much as a hundred times.
At that time, Aave’s name was still ETHLend, a decentralized peer-to-peer lending platform, but the operating data was relatively bleak, because the transaction efficiency of peer-to-peer order matching was low, so the market space of ETHLend was very limited.
After realizing that peer-to-peer order matching and lending would not work, the entire team learned from the pain and changed the development direction of the entire project. Not only did it change its name to Aave, but it also shifted its core business from peer-to-peer lending to a decentralized lending pool.
The logic of the lending pool is roughly as follows: users (depositors) deposit their encrypted assets into the lending pool to provide liquidity, and can obtain atoken certificates in a ratio of 1:1, that is, deposit 200ETH and get 200aETH, when the user returns the atoken to the lending pool, he can redeem his own assets and earn deposit interest; the borrower can deposit multiple mortgage assets into the lending pool to borrow other assets. When repaying, if all Loans and interest can be repaid if the borrowed tokens do not reach the liquidation line. If the liquidation line is reached, part of the mortgage assets will be liquidated.
A very ingenious point in the design of the Aave lending pool is that when users borrow money, they need to pay a certain percentage of borrowing interest and handling fees. Among them, part of the service fee is used to repurchase and destroy the LEND tokens in circulation, which leads to the deflationary token model of LEND, and the number of tokens will become smaller and smaller.
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Currently, the Aave lending pool already supports 20 kinds of cryptocurrency assets including DAI, USDC, ETH, BAT, KNC, YFI, etc.
In addition to the decentralized lending pool, the Aave team has also successively launched flash loans and credit loans.
Flash Loahs is a relatively groundbreaking product in the development of Aave. Most users are very unfamiliar with Flash Loan, because its target users are developers of financial products, and it is not suitable for ordinary users.
Flash loans are also called unsecured loans. Users only need to complete the actions of borrowing, repayment and interest within one block at the same time, and they can successfully arbitrage. That is to say, the user needs to complete the actions of lending funds, returning all funds and paying interest within 13 seconds (the average block time of Ethereum is about 13s), and the transaction is considered successful. Make a mistake and the deal will be void.
Flash Loans Use Cases
In addition to flash loans, another innovative product of Aave is credit loans. Liquidity providers can authorize credit lines (atoken certificates) to people they trust, or they can also authorize credit lines to a specific smart contract to earn additional fees.
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The security guarantee incentive is that users will mortgage AAVE as a guarantee to prevent possible insolvency problems during the lending process. The ecosystem incentives are similar to mining projects in the current market. Users mine by making markets in Balancer, or borrow or loan in the Aave lending pool to obtain mining rewards.
