Aave (AAVE) is an Ethereum-based protocol known for its innovative approach to financial services. The platform enables users to automate the lending and borrowing of crypto through smart contracts. By eliminating the involvement of a third-party intermediary, $AAVE gives users complete ownership of their Ethereum-based assets, allowing them to decide how to manage and transfer their crypto funds.
The $AAVE token facilitates transactions within the Aave ecosystem, serving utility, governance, and staking purposes on the platform. The recent price surge of $AAVE has become a hot topic of discussion in the crypto market as it is gaining the interest of many retail and institutional investors. In this article, we will discuss the major reasons that are driving Aave’s growth.
What is Aave ($AAVE)?
Aave is a decentralized crypto platform where users can buy, lend, and borrow crypto assets without requiring intermediaries like banks and clearing agencies. The smart contracts, which power the ecosystem, include information regarding the fund distribution, transaction fees, and collateral, and once the right conditions are met, it automates the transactions.
Users deposit a certain amount of crypto, which will be more than the amount they intend to borrow, as collateral. This provides liquidity for Aave and protects lenders from losing money in the event of a liquidation. Utilizing Ethereum’s Proof-of-Stake (PoS) consensus mechanism, Aave is able to enhance its platform security while enabling staking in $AAVE, allowing token holders to provide liquidity, support the network, and earn rewards for their efforts.
Aave ($AAVE) Price Surge
Aave’s ($AAVE) price has increased by 30.65% in the past seven days. On January 19, the coin was trading at $295.09. Soon later, the price surged to reach a milestone of $350. The token is currently changing hands at $338.01, with a 24-hour trading volume of $1.73 billion. The latest surge has increased investor interest in the altcoin, with many experts believing its price could target $400 in the coming days. $AAVE is now among the top 5 traded altcoins in the market over the past week.
What is Driving Aave’s Growth?
AAVE’s recent price growth can be attributed to developments related to the platform.
1. Chainlink’s Smart Value Recapture (SVR)
Decentralized oracle platform Chainlink has announced a partnership with Aave to implement its Smart Value Recapture (SVR) protocol on the decentralized finance (DeFi) platform. SVR is a newly introduced protocol aimed at enhancing the profitability of DeFi platforms by recapturing Maximal Extractable Value (MEV), which is often lost to third parties during transactions.
The system will facilitate revenue payback to users from the maximum extractable value, and when it comes into action, the Aave platform can return 40% of the MEV liquidation profits to its users. It will also enhance the performance and management of the Aave platform. Though this mechanism has not come into effect yet, and faces some MEV optimization issues, experts are already forecasting a possible uptrend, which has contributed to the price surge.
2. Increased Trading Volume
Trading volume indicates the interest of investors in crypto. The trading volume of AAVE has increased by $1.44 million, which is a 62% increase in the last 24 hours. This has led to the token gaining significant market traction. The increased trading volume accompanied by an increase in price shows a bullish future for $AAVE.
3. Investor’s Inclination Toward DeFi Tokens
DeFi platforms allow users to earn interest, which is much higher compared to traditional financial institutions. Additionally, it enables transactions without relying on intermediaries, which is increasingly popular among investors, boosting the value of DeFi tokens like $AAVE even further. The improved sentiment has led to the trading volume of $AAVE rising by 20%.
4. Trump’s Victory in the US Election
Not only Aave, but all the crypto coins are showing an uptrend with Trump’s victory in the US elections. Many believe that the Trump administration will introduce crypto-friendly policies, with less regulation and promoting growth. With this in mind, many traders are investing more in various cryptocurrencies including Aave, which has propelled its price to historic levels.
Will Aave Hit a $400 Milestone?
The existing market scenario and the upcoming developments associated with Aave showcase a bullish momentum for the coin in the coming days. Considering the potential of the $AAVE token, many traders are holding on to them instead of selling, creating a supply shock and increased demand, which leads to increased prices.
The Chainlink partnership, increased adoption of DeFi services, and the incoming pro-crypto Trump administration are supporting Aave’s price growth. $AAVE has already surpassed its three-year high price, reaching around $395 last month. If the current momentum sustains in the coming days, then it is expected to hit the $400 milestone.
Final Thoughts
Aave is a crypto lending platform where one can borrow crypto against the deposited collateral. The $AAVE token can be used for staking and governance, providing holders control in the $AAVE administration and management. The Aave platform holds around $21.3 billion in liquidity across eight networks and fifteen markets, making it one of the best cryptos to buy. The recent price surge and the prediction of hitting a milestone of $400 soon ignited the worth of the coin. However, whether Aave is a good investment or not may depend on the investor’s market sentiments, so do your own research before buying $AAVE tokens.